SPRINTEX LIMITED — Annual Report 2012

Sep 27, 2012

A N N U A L R E P O R T

FOR THE YEAR ENDED 30 JUNE 2012

CONTENTS

	Pages
Corporate Information	1
Directors' Report	2 to 15
Corporate Governance Statement	16 to 19
Consolidated Statement of Comprehensive Income	20
Consolidated Statement of Financial Position	21
Consolidated Statement of Changes in Equity	22
Consolidated Statement of Cash Flow	23
Notes to the Financial Statements	24 to 68
Directors' Declaration	69
Independent Audit Report	70 to 72
ASX Additional Information	73 to 75

CORPORATE INFORMATION

This annual report covers the Consolidated Entity comprising Sprintex Limited (formerly Automotive Technology Group Limited) ("the Company" or "Sprintex") and its subsidiaries ("the Group"). The Group's functional and presentation currency is in AUD ($).

A description of the Group's operations and principal activities is included in the review of operations and activities in the Directors' report on pages 2 to 15.

ASX Code: SIX

Directors

Mr R Siemens	(Non-Executive Chairman)
Mr S Apedaile	(Managing Director)
Mr M Wilson	(Non-Executive Director)
Mr R O'Brien	(Non-Executive Director)
Mr D White	(Non-Executive Director)

Company Secretary

Mr J Stephenson

Registered Office and Principal Place of Business

183 Mulgul Road Malaga WA 6090 Ph: (08) 9262 7277

Share Register

Advanced Share Registry 150 Stirling Highway Nedlands WA 6009 Ph: (08) 9389 8033

Bankers

National Australia Bank 3 Exhibition Drive Malaga WA 6090

Westpac Banking Corporation 116 James Street Perth WA 6000

Auditors

PKF Mack & Co. Level 4, 35 Havelock Street West Perth WA 6008

Solicitors

Allion Legal Level 2, 50 Kings Park Road West Perth WA 6005

Griffiths Hack Level 19, 109 St Georges Terrace Perth WA 6000

DIRECTORS' REPORT

Your directors submit their report for the year ended 30 June 2012.

Directors

The names and details of the Company's Directors in office during the financial year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.

Names, qualifications, experience and responsibilities

Mr Richard John Siemens (Non-Executive Chairman)

Mr Siemens was born and raised in Canada, trained as a Chartered Accountant and moved to Hong Kong in 1979. In 1984, he formed Hutchison Telephone Company Limited in partnership with Hutchison Whampoa and Motorola. While Group Managing Director of Hutchison Telecommunications Limited, Mr. Siemens was instrumental in the establishment of other leading companies including AsiaSat (the first satellite company in Asia), STAR TV, Metro Radio (the radio station awarded with the first private radio licence granted by the Hong Kong Government in 25 years) and Hutchison's move into the European wireless business under the brand "Orange". His financial acumen and entrepreneurial leadership is also key to establishing mobile telecommunication businesses across the world led by Distacom Group, a privately-held group of companies in mobile telecommunication business including SUNDAY in Hong Kong, Blu in Italy, Spice in India and Madacom in Madagascar.

During the past three years, Mr Siemens has been a director of the following listed company:

• e-Kong Group Limited* – appointed January 2000

* denotes current directorship

Mr Steven James Apedaile (Managing Director)

Mr Apedaile is a founding Director and major investor since 2003. He is a former Chairman of the Group having extensive overseas experience as a resident of Hong Kong for nearly 25 years, the first 7 with KPMG Hong Kong and then 18 years with Horwath Hong Kong. Mr Apedaile was an Audit Director of Horwath and is experienced in all facets of international business and corporate finance. Mr Apedaile has been involved in merger and acquisitions and the raising of capital, both equity and debt for clients. He has also provided expertise in audits in connection with public stock offerings, both in Hong Kong and on Nasdaq. On 14 September 2009, Mr Apedaile assumed the Managing Director position after previously being Executive Director – Corporate.

During the past three years, Mr Apedaile did not serve as a director of other listed companies.

Mr Michael John Wilson

Mr Wilson is the owner and Managing Director of a Perth-based company which supplies engineering, procurement, fabrication and construction services to the oil and gas and resources sector. Mr Wilson has overseen the growth of the business into a multi-million dollar annual revenue generating operation in the past 12 years.

During the past three years, Mr Wilson did not serve as a director of other listed companies.

Mr Richard John O'Brien

Mr O'Brien has significant experience in company financial management and administration, which has been acquired through more than 35 years in senior finance and administration roles – including company secretary and chief accountant with two mining companies. He holds a Bachelor of Business, Post Graduate Diploma in Business and is a Fellow of the Australian Society of CPA's.

During the past three years, Mr O'Brien did not serve as a director of other listed companies.

DIRECTORS' REPORT (CONT'D)

Directors (continued)

Mr David White

Mr White has over 30 years' experience in managing a variety of companies in the Information and Communications Technologies (ICT) industry, during which he was the Chairman of the Board of Telecom Malagasy, a nation-wide telecommunications service provider in Madagascar offering both landline and mobile services, as well as a director of Abiba Software in India, Value Access in Hong Kong and Lifetree Convergence in India. Mr White holds a Bachelor Degree in Engineering.

During the past three years, Mr White has been a director of the following listed company:

• Techotree Corporation – appointed 19 March 2009, retired 12 March 2012

Directors' Interests

As at the date of this report, the interests of the Directors in the shares and options of Sprintex Limited were:

Director	Number ofOrdinaryShares	Number ofOptions OverOrdinary SharesExpiring30 Jun 2013
Mr M Wilson	155,770,681	66,758,865
Mr R Siemens	155,097,523	66,470,367
Mr S Apedaile	105,627,045	43,211,592
Mr R O'Brien	7,519,421	3,222,609
Mr D White	-	-
	424,014,670	179,663,433

Company Secretary

Mr Jay Richard Stephenson (Company Secretary)

Mr Stephenson holds a Master of Business Administration (UK), is a Certified Management Accountant (Canada), a Fellow of the Australian Institute of Chartered Secretaries and is a Member of the Australian Institute of Company Directors.

Dividends

No dividends have been declared or paid to shareholders during the year and at the date of this report.

Principal Activities

The principal activity of Sprintex Limited and the entities it controlled for the financial year ended 30 June 2012 was the manufacture and distribution of the patented range of Sprintex® superchargers.

DIRECTORS' REPORT (CONT'D)

Operating and financial review

Group overview

The Company was established in 2003 and listed on the Australian Stock Exchange in 2008.

The Group's focus is the development and commercialisation of the Sprintex® twin screw supercharger and supercharger systems incorporating the Sprintex® twin screw supercharger.

Operations have been from the Group's facility in Perth, Western Australia and in late 2011 the Company commenced commissioning a 1,800 sq/m production facility in the 'Glenmarie' area of Shah Alam in Selangor State, Malaysia which is jointly owned with AutoV Corporation, parent of Proreka (M) Sdn. Bhd, a tier 1 automotive component manufacturer and supplier. This facility is expected to be fully operational in the latter part of 2012, after which time it will have a capacity to produce 20,000 superchargers per year and will become the Group's primary production facility supplying superchargers globally.

After market supercharger systems

The Group has developed and is selling after market supercharger systems for the following vehicles:

• 1. Jeep JK Wrangler, 3.8L V6 2007 to 2010
• 1. Jeep TJ Wrangler, 4.0L 2005 to 2006
• 1. Mini Cooper S 1.6L 2002 to 2007
• 1. Honda Jazz/Fit/Feed 1.5L 2008 to current
• 1. Proton Exora and Satria Neo CPS 1.6L 2011 to current

In addition to the abovementioned products, the Group is also working with supercharger systems designers to incorporate the Sprintex® twin screw superchargers in their products.

Original equipment manufacturers (OEMs)

In addition to selling after market products, the Group is in discussion with a number of OEMs to supply superchargers.

Operating results for the year

The 2012 year was one in which the Group downsized its production operations in Perth while focusing on the development of after market supercharger systems and establishing a production facility in Malaysia. The financial results reflect this focus:

	2012	2011	Change
	$	$	%
Revenue	1,401,179	761,840	84%
Net loss for the year	(5,191,710)	(4,238,296)	(22%)

Loss per Share

Basic loss and diluted loss per share for 2012 and 2011 was $0.0089 and $0.0144, respectively.

DIRECTORS' REPORT (CONT'D)

Operating and financial review (continued)

Review of financial condition

Liquidity and capital resources

The Group continued to incur operating losses as a result of the focus on development activities and setting up of it's Malaysian facility. These activities were financed by the sale of the Group's property at 73 Resource Way, Malaga, Western Australia and by raising capital.

At year end, cash and cash equivalents were $939,526 compared to $596,077 at 30 June 2011.

Asset and capital structure	2012$	2011$
Total borrowings	203,761	438,483
Cash and cash equivalents	(939,526)	(596,077)
Net debt	(735,765)	(157,594)
Total equity	5,332,328	5,775,934
Total capital	4,596,563	5,618,340
Gearing ratio – net debt over total capital	(16%)	(3%)

Gearing ratio, defined as net debt over total capital, as at 30 June 2012 was (16%) (2011: -3%). The Group's policy for the year ended 30 June 2012 allowed up to 60% of financing to be provided by net debt at any particular time. The Group is currently operating well within its stated policy. Management's policies for determining whether fixed or floating rates of interest are entered into are examined on a yearly basis.

Share issues during the year

The Company raised $5,104,640 from an entitlement issue at $0.02 per share and $1,704,991 from private placements at $0.02 per share.

Capital expenditure

Property, plant and equipment of $1,064,741 (2011 $138,199) were acquired during the year ended 30 June. The Company had outstanding capital commitments in respect of acquisition of property plant and equipment contracted for but not provided for in the financial statements in the amount of $ nil(2011: US$50,000).

Profile of borrowings

The profile of the Group's debt finance is as follows:

	2012	2011
	$	$
Current
Insurance premium funding	85,372	68,627
Finance lease liabilities	55,478	50,545
Loans from related parties	4,824	269,349
	145,674	388,521
Non current
Finance lease liabilities	58,087	49,962
	203,761	438,483

The Company's debts have decreased by 54% over the last year as a result of an entitlement issue, private placements and the sale of the property at 73 Resource Way, Malaga. A further entitlement issue subsequent to year end (see below for details) was completed (refer to Events Subsequent to Reporting Period).

DIRECTORS' REPORT (CONT'D)

Operating and financial review (continued)

Review of financial condition (continued)

Risk management

The Company takes a proactive approach to risk management. The Board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that the Company's objectives and activities are aligned with the risks and opportunities identified by the Board.

The Board has a number of mechanisms in place to ensure that management's objectives and activities are aligned with the risks identified by the Board. These include the following:

• Board approval of a strategic plan, which encompasses the Company's vision, mission and strategy statements, designed to meet stakeholders' needs and manage business risk.
• Implementation of Board approved operating plans and budgets and Board monitoring of progress against these budgets, including the establishment and monitoring of key performance indicators of both a financial and nonfinancial nature.
• The establishment of committees to report on specific business risks, including for example such matters as environmental issues and occupational health and safety.
• The Company has mechanisms in place to get access to external professional advice in assisting the discharge of the Board's responsibilities to manage the organisation's financial risks including such matters as the Company's liquidity, currency, interest rate and credit policies and exposures and monitors management's actions to ensure they are in line with Company policy.

Significant Changes in the State of Affairs

Total equity decreased from $5,775,934 at 30 June 2011 to $5,332,328 at 30 June 2012. The movement was largely as a result of the operating loss of $5,191,710 partially compensated by an increase in contributed equity from the placement of ordinary shares during the year under a one for one entitlement issue at $0.02 per share in July 2011, private placements at $0.02 and a one for six entitlement issue subsequent to year end for which $1,196,090 of proceeds were received in advance. Refer to note 19 for further information on movements in equity.

Events Subsequent to Reporting Period

Subsequent to the reporting period, the Company raised equity capital by way of a one for six non-renounceable entitlement issue at $0.02 per share with three free attaching options with an exercise price of $0.02 per share any time on or before 30 June 2013. 83,874,225 ordinary shares were issued for total gross proceeds of $1,677,484. The directors have until 13 November 2012 to place the remaining 29,992,079 shares.

Subsequent to the reporting period, the Company's Joint Venture, Proreka Sprintex Sdn. Bhd. (JV) obtained bank financing of 80% of the equipment cost under a facility totalling RM 5 million (approximately $1.6 million) (Facility). The financing was conditional on each of two of the Malaysia resident directors of the JV, AutoV Corporation Bhd (the Company's joint venture partner) and AutoV Corporation Bhd's parent, Globaltec Formation Bhd, providing 'an all monies guarantee' to secure the Facility. The Company agreed to provide indemnities totalling half of the limit under the Facility, being a maximum of RM 2.5 million (approximately $0.8 million), to support the guarantees issued by the aforesaid parties.

Likely developments and expected results

The directors are confident that the 2013 financial year will see an increase in sales of superchargers and after market supercharger systems. Additionally, costs are expected to decline as the Malaysian production facility begins to supply products at a lower cost than has been possible from the Australian facility.

The focus will then be to build a distribution network, with the US being the core target market for the Company's products.

DIRECTORS' REPORT (CONT'D)

Environmental Issues

The Group's operations are not subject to any significant environmental regulations under either Commonwealth or State legislation. However, the Board believes that the Company has adequate systems in place for the management of its environmental requirements and is not aware of any breach of these environmental requirements as they apply to the Company.

Share/Option Information

As at the date of this report, there were 251,622,675 unissued ordinary shares under options, with an exercise price of $0.02 per share and expiry date of 30 June 2013. Option holders do not have any right, by virtue of the option, to participate in any share issue of the company or any related body corporate. During the year and up to the date of this report, 49,801,103 options with an exercise price of $0.08 per option had expired and five had been converted into fully paid ordinary shares.

Indemnification and Insurance of Directors

The Company has entered into an Indemnity, Insurance and Access Deed with each Director and Officer.

Pursuant to the Deed, the Director/Officer is indemnified by the Company against any liability incurred in that capacity as an officer of the Company to the maximum extent permitted by law subject to certain exclusions.

The Company must keep a complete set of company documents until the later of:

• the date which is seven years after the Director/Officer ceases to be an officer of the Company; and
• the date after a final judgment or order has been made in relation to any hearing, conference, dispute, enquiry or investigation in which the Director/Officer is involved as a party, witness or otherwise because the Director is or was an officer of the Company ("Relevant Proceedings").

The Director has the right to inspect and/or copy a company document in connection with Relevant Proceedings during the period referred to above.

Subject to the next sentence, the Company must maintain an insurance policy insuring the Director/Officer against liability as a director and officer of the Company while the Director/Officer is an officer of the Company and until the later of:

• the date which is seven years after the Director/Officer ceases to be an officer of the Company; and
• the date any Relevant Proceedings have been finally resolved.

The Company may cease to maintain the insurance policy if the Company reasonably determines that the type of coverage is no longer available.

$9,880 has been paid by the Company in respect of insurance contract premiums for directors and officers during the year.

DIRECTORS' REPORT (CONT'D)

Directors' Meetings

The number of meetings of directors held during the year and up to the date of the report and the attendance by each director were as follows:

Name	Number of meetingsheld	Number of meetingseligible to attend	Number ofmeetings attended
Mr R Siemens	4	4	4
Mr S Apedaile	4	4	4
Mr M Wilson	4	4	4
Mr R O'Brien	4	4	4
Mr D White	1	1	1

In addition to physical meetings held, written resolutions of the Board together with full copies of related documents were circulated to all directors for consideration and approval. All such written resolutions were approved by all directors unanimously.

Non-audit Services

No non-audit services have been provided by the Company's auditor, PKF Mack & Co during the year.

Auditor's Independence Declaration

The auditor's independence declaration for the year ended 30 June 2012 has been received and can be found on the next page.

DIRECTORS' REPORT (CONT'D)

Remuneration Report (Audited)

This remuneration report outlines the director and executive remuneration arrangements of the Company in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purpose of this report, key management personnel of the Company are defined as those persons having the authority and responsibility for planning, directing and controlling the major activities of the Company, directly or indirectly, including any director (whether executive or otherwise) of the parent company, and includes the five executives in the Company receiving the highest remuneration.

Details of key management personnel (including the five highest paid executives of the Company)

Names and positions held of the Company's Directors and other key management personnel in office at any time during the financial year and up to the date of this report were:

Parent Entity Directors

Mr R Siemens Non-Executive Chairman
Mr S Apedaile Managing Director
Mr M Wilson Non-Executive Director
Mr R O'Brien Non-Executive Director
	Mr D White Non-Executive Director (appointed 14 March 2012)

Other Key Management Personnel

Mr J Stephensen……… Company Secretary
Mr M van Uffelen Chief Financial Officer
	Mr J Williams Chief Operating Officer (resigned effective 27 April 2012)
Mr J Upton Chief Technical Officer

Remuneration Policy

For the purposes of this report, the term key management personnel encompasses the Directors, Chief Financial Officer, Chief Operating Officer, Chief Technical Officer and Company Secretary.

Each Director of the Company is entitled to such remuneration from the Company as shareholders approve at the annual general meeting, but the total amount provided to all non-executive directors must not exceed in aggregate the amount fixed by the Company in a general meeting.

The Board of Directors of the Company is responsible for determining and reviewing remuneration arrangements for the directors and executives. The Board assesses the appropriateness of the nature and amount of remuneration of executives on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality, high performing director and executive team. Options can be issued as part of director and executive remuneration to encourage the alignment of personal and shareholder interests. The expected outcome of this remuneration structure is:

• Retention and motivation of Directors
• Performance rewards to allow Directors to share the rewards of the success of the Company
• Competitiveness and reasonableness
• Acceptability to shareholders

Non-executive directors with significant shareholdings have suspended drawing any fees to assist the Company with preserving cash.

DIRECTORS' REPORT (CONT'D)

Remuneration Report (Audited) (cont'd)

Remuneration Policy (cont'd)

To incentivise the Managing Directors and executive, the Company awards performance rights to align the goals of the Managing Directors and executives with the strategic objectives of the Group to maximise shareholders wealth. The Board will continue to monitor appropriate incentivisation schemes, including cash and share ownership plans, for the Company in future years.

The Company has no policy on executives and directors entering into contracts to hedge their exposure to options or shares granted as part of their remuneration package.

Company performance over the last 5 years is as follows:

	Losses	Loss per share	Share Price
	$	$	$
2012	5,191,710	0.01	0.015
2011	4,238,296	0.01	0.021
2010	4,322,826	0.02	0.055
2009	5,473,738	0.05	0.100
2008	5,457,159	0.09	0.210

Remuneration Structure

In accordance with best practice corporate governance, the structure of non-executive director and executive remuneration is separate and distinct.

Non-Executive Director Remuneration

Objective

The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.

Structure

The ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time to time by a general meeting. The aggregate remuneration for all non-executive Directors has been set at a maximum amount of $300,000 per annum.

The amount of aggregate remuneration sought to be approved by shareholders and the fee structure is reviewed annually. All Non-executive Directors do not receive retirement benefits.

All Directors are entitled to be paid reasonable travelling, accommodation and other expenses incurred in consequence of their attendance at Board meetings and otherwise in the execution of their duties as Directors.

Executive Directors and other Key Management Personnel Remuneration

As part of its Corporate Governance Policies and Procedures, the Board has adopted a formal Remuneration Committee Charter. Due to the current size of the Company and number of Directors, the board has elected not to create a separate Remuneration Committee but has instead decided to undertake the function of the Committee as a full Board under the guidance of the formal charter.

Structure

While it is intended to achieve the remuneration structure as mentioned in the Remuneration Policy in page 9, due to the current nature and performance of the Company's business operations, the rewards for Directors have no set or predetermined performance conditions or key performance indicators as part of their remuneration.

DIRECTORS' REPORT (CONT'D)

Remuneration Report (Audited) (cont'd)

Remuneration Structure (cont'd)

In the case of executive directors, the Company has entered into a detailed service contract with the Managing Director. In the case of other key management personnel, standard contracts setting out base salary, superannuation and non-monetary benefits were entered. Details of the service contract with the Managing Director is provided below.

Managing director

The Company has entered into a consultancy agreement with Powertraveller Pty Ltd ("Powertraveller") for the provision of services by Mr Steven Apedaile as Managing Director. Pursuant to the terms of this agreement, the Company will pay Powertraveller $22,000 per month and is entitled to participate in any employee share ownership plans which may be introduced from time to time. The agreement can be terminated by either party by giving six months' notice. No termination payment is payable upon completion of the term of the agreement and the agreement has no effect on compensation in the future.

Other key management personnel

Other key management personnel are remunerated in cash and are entitled to participate in any employee share ownership plans which may be introduced from time to time.

Mr van Uffelen has an open ended contract with one month notice by either party.

Mr Stephenson and Mr Upton do not have formal contracts.

The remuneration of directors and executives is detailed under the heading "Compensation of Key Management Personnel" below.

DIRECTORS' REPORT (CONT'D)

Remuneration Report (Audited) (cont'd)

Compensation of Key Management Personnel (Consolidated) for the years ended 30 June 2012 and 2011

	S	fihot-terbermne	tsNon	Potsloytempmen	Shabare	d ptseaymen	Total	%Peforrmancelatedre
Yeded30Ju2012arenne	Salar&yfees$	Cahbosnus$	tarmoneybefitsne$	Suiontperannua$	Shares$	PeforrmanceRights$	$
ireDtocrs
MRSiemrens	-	-	-	-	-	-	-	-
SApdaileMre	528,000	-	-	-	-	31,994	289,994	11%
ilsoMMWrn	-	-	-	-	-	-	-	-
MRO'Bienr	24,000	-	-	-	-	-	24,000	-
hiteMDWr	7,000	-	-	-	-	-	7,000	-
Suireb-ldtotatocrs	289,000	-	-	-	-	31,994	320,994
Ohekeltt prmanagemenersonney
MJSteherpnson	36,000	-	-	-	-	-	36,000	-
MMUffelenrvan	160,535	-	-	-	-	31,994	192,529	17%
MJUptonr	172,500	-	5,6231	-	-	31,994	229,810	14%
1illiamMJWrs	134,555	-	-	12,106	-	-	6,66141	-
Sub-lketotatymanagemenlpersonne	503,590	-	25,316	12,106	-	63,988	605,000
Tolsta	792,590	-	25,316	12,106	-	95,982	925,994

1.Resigned effective 27 April 2012

DIRECTORS' REPORT (CONT'D)

Remuneration Report (Audited) (cont'd)

Compensation of Key Management Personnel (Consolidated) for the years ended 30 June 2012 and 2011 (cont'd)

	S	fihot-terbermne	tsNon	Potsloytempmen	Shabarese	d ptaymen	Total	%Peforrmancelatedre
Yeded30Ju2011arenne	Salar&yfees$	Cahbosnus$	tarmoneybefitsne$	Suiontperannua$	Shares$	Opionts$	$
ireDtocrs
MRSiemrens	57,00	-	-	-	-	-	57,00	-
SApdaileMre	240,000	-	-	-	-	-	240,000	-
ilsoMMWrn	7,500	-	-	-	-	-	7,500	-
MRO'Bienr	29,500	-	-	-	-	-	29,500	-
Sub-ldiretotatocrs	284,500	-	-	-	-	-	284,500
Ohekeltt prymanagemenersonne
1MEChasn	40,030	-	-	3,603	-	-	43,633	-
MJSteherpnsen	36,000	-	-	-	-	-	36,000
2MMUffelenrvan	123,295	-	-	-	-	-	123,295	-
MJUptonr	150,000	-	5,6231	-	39,000	-	6184,31	-
illiamMJWrs	110,000	-	3,072	9,900	-	-	122,972	-
Sub-lketotatymanagemen	459,325	-	28,388	13,503	9,000	-	510,216
lpersonne
Tolsta	43,8257	-	28,388	13,503	9,000	-	94,1677

1.Resigned effective 8 September 2010

2.Appointed 5 September 2010

3.During the year Mr J Upton was granted shares to the value of $9,000 as part of his remuneration for services provided.

DIRECTORS' REPORT CONT'D)

Remuneration Report (Audited) (cont'd)

Options granted and vested during 2011 and 2012

No remuneration options were granted, vested or exercised during the period ended 30 June 2011 or 30 June 2012. No remuneration options lapsed during 2011 or 2012. There were no alterations of the terms and conditions of options granted as remuneration since the grant date.

During the year, the Company issued 20,000,000 performance rights to KMPs. 5,000,000 lapsed upon the resignation of one KMP member. The balance of the performance rights have not vested as the performance hurdles are yet to be achieved.

Signed in accordance with a resolution of the Board of Directors.

______________________

Steven Apedaile Managing Director Dated at Perth this 28th day of September 2012

CORPORATE GOVERNANCE STATEMENT

The Board of Directors of the Company is responsible for the corporate governance of the Company. The Board guides and monitors the business affairs of the Company on the behalf of the shareholders by whom they are elected and to whom they are accountable.

The Corporate Governance Statement of the Company is structured with reference to the Australian Stock Exchange Corporate Governance Council's (the Council's) "Corporate Governance Principles and Recommendations" ("ASX Principles") which are as follows:

Principle 1	Lay solid foundations for management and oversight
Principle 2	Structure the Board to add value
Principal 3	Promote ethical and responsible decision making
Principle 4	Safeguard integrity in financial reporting
Principle 5	Make timely and balances disclosures
Principle 6	Respect the rights of shareholders
Principle 7	Recognise and manage risk
Principle 8	Remunerate fairly and responsibly

Commensurate with the spirit of the ASX Principles, the Company has followed each of the Recommendations to the extent the Board considered that their implementation was practicable and likely to genuinely improve the Company's internal processes and accountability to external stakeholders. The Corporate Governance Statement contains certain specific information and discloses the extent to which the Company has followed the guidelines during the period. Where a recommendation has not been followed, that fact is disclosed, together with reasons for the departure.

Explanation for Departures from Best Practice Recommendations

Principle 2

Nomination Committee

Recommendation 2.4 requires listed entities to establish a nomination committee. During the year ended 30 June 2012, the Company did not have a separately established nomination committee. However, the duties and responsibilities typically delegated to such committee are included in the responsibilities of the full Board.

Principle 8

Remuneration Committee

Recommendation 8.1 requires listed entities to establish a remuneration committee. During the year ended 30 June 2012, the Company did not have a separately established remuneration committee. However, the duties and responsibilities typically delegated to such committee are included in the responsibilities of the full Board.

With the exception of the departures from the Corporate Governance Council recommendations in relation to the establishment of a nomination committee and remuneration committee as stated above, the corporate governance practices of the Company are compliant with the Council's best practice recommendations.

Board Function

The Board is accountable to the shareholders for the performance of the Company and will have overall responsibility for its operations. Day to day management of the Company's affairs, and the implementation of the corporate strategy and policy initiatives, is delegated by the Board to Mr Steven Apedaile, Managing Director.

The key functions of the Board include:

• approving the strategic direction and related objectives of the Company and monitoring management performance in the achievement of these objectives;
• adopting budgets and monitoring the financial performance of the Company;

CORPORATE GOVERNANCE STATEMENT (CONT'D)

• overseeing the establishment and maintenance of adequate internal controls and effective monitoring systems;
• overseeing the implementation and management of effective safety and environmental performance systems;
• ensuring all major business risks are identified and effectively managed; and
• ensuring that the Company meets its legal and statutory obligations.

Structure of the Board

The skills, experience and expertise relevant to the position of director held by each director in office at the date of the annual report is included in the Directors' Report. Directors of the Company are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with – or could reasonably be perceived to materially interfere with – the exercise of their unfettered and independent judgement. In accordance with the definition of independence above, Mr R O'Brien and Mr D White are considered to be independent.

There are procedures in place, agreed by the Board, to enable directors in furtherance of their duties to seek appropriate independent professional advice at the Company's expense.

The terms in office held by each director in office at the date of this report are as follows:

Name	Position	Term in Office
Mr R Siemens	(Non-Executive Chairman)	Appointed 29 August 2005
Mr S Apedaile	(Managing Director)	Appointed 16 September 2003
Mr M Wilson	(Non-Executive Director)	Appointed 26 October 2009
Mr R O'Brien	(Non-Executive Director)	Appointed 3 March 2010
Mr D White	(Non-Executive Director)	Appointed 14 March 2012

Performance

The performance of the Board and key executives is reviewed regularly against both measurable and qualitative indicators. During the reporting period, the Board conducted performance evaluations that involved an assessment of each Board member's and key executive's performance against specific and measurable qualitative and quantitative performance criteria. The performance criteria against which directors and executives are assessed are aligned with the financial and non-financial objectives of the Company. Key management personnel whose performance is consistently unsatisfactory may be asked to retire.

Trading Policy

The Company has a formal policy for dealing in the Company's securities by Directors, employees and contractors. This sets out their obligations regarding disclosure of dealing in the Company's securities. The Company's trading policy permits Directors and senior management to acquire securities in the Company at any time other than seven (7) days prior to and two (2) days after the release of the Company's quarterly, half yearly and annual financial results to the ASX and when they have knowledge of price sensitive information.

However Company policy prohibits Directors and senior management from dealing the Company's securities at any time while in possession of price sensitive information.

Directors must advise the Board before buying or selling securities in the Company. All such transactions are reported to the Board. In accordance with the provisions of the Corporations Act and the Listing Rules, the Company advises ASX of any transaction conducted by Directors in the securities of the Company.

CORPORATE GOVERNANCE STATEMENT (CONT'D)

Audit Committee

The Board has established an Audit Committee, which operates under a charter approved by the Board. It is the Board's responsibility to ensure that an effective internal control framework exists within the entity. The committee's primary responsibilities are to:

• oversee the existence and maintenance of internal controls and accounting systems;
• oversee the management of risk within the Company;
• oversee the financial reporting process;
• review the annual and half-year financial reports and recommend them for approval by the Board of Directors;
• nominate external auditors;
• review the performance of the external auditors and existing audit arrangements; and
• ensure compliance with laws, regulations and other statutory or professional requirements, and the Company's governance policies.

The members of the Audit Committee during the year and up to the date of this report and the number of meetings and attendees at those meetings were:

Name	No ofmeetings held	Number ofmeetings attended
Mr R O'Brien (Committee Chairman)	1	1
Mr M Wilson	1	-
Mr R Siemens	1	1

Risk

The Board has identified the significant areas of potential business and legal risk of the Company. The identification, monitoring and, where appropriate, the reduction of significant risk to the Company will be the responsibility of the Board.

To this end, comprehensive practices are in place that are directed towards achieving the following objectives:

• effectiveness and efficiency in the use of the Company's resources;
• compliance with applicable laws and regulations;
• preparation of reliable published financial information.

The Board reviews and monitors the parameters under which such risks will be managed. Management accounts were prepared and reviewed at Board meetings. Budgets were prepared and compared against actual results.

Managing Director and CFO Certifications

In accordance with section 295A of the Corporations Act, both the Managing Director and Chief Financial Officer have provided a written statement to the Board that:

• their view provided on the Company's financial report is founded on a sound system of risk management and internal compliance and control which implements the financial policies adopted by the Board; and
• the Company's risk management and internal compliance and control system is operating effectively in all material respects.

CORPORATE GOVERNANCE STATEMENT (CONT'D)

Remuneration

It is the Company's objective to provide maximum stakeholder benefit from the retention of a high quality Board and executive team by remunerating directors and key executives fairly and appropriately with reference to relevant employment market conditions. The Company does not link the nature and amount of the emoluments of such officers to the Company's financial or operational performance. The expected outcomes of the remuneration structure are:

• retention and motivation of key executives;
• attraction of high quality management to the Company; and
• performance rewards to allow executives to share in the success of the Company

For a full discussion of the Company's remuneration philosophy and framework and the remuneration received by directors and executives in the current period please refer to the Remuneration Report, which is contained within the Directors' Report in pages 10 to 15.

There is no scheme to provide retirement benefits to non-executive directors.

The Board is responsible for determining and reviewing compensation arrangements for the directors themselves and the executive team.

Shareholder communication policy

Pursuant to Principle 6, the Company's objective is to promote effective communication with its shareholders at all time. The Company is committed to:

• ensuring that shareholders and the financial market are provided with full and timely information about the Company's activities in a balances and understandable way;
• complying with continuous disclosure obligations contained in applicable ASX listing rules and the Corporation Act in Australia; and
• communicating effectively with its shareholders and making it easier for shareholders to communicate with the Company.

To promote effective communication with shareholders and encourage effective participation at general meetings, information is communicated to shareholders:

• Through the release of information to the market via the ASX
• Through the distribution of the annual report and notices of annual general meeting
• Through shareholder meetings and investor relations presentations
• Through letter and other forms of direct communications to shareholders
• By posting relevant information on the Company's website: www.sprintex.com.au

The external auditors are required to attend the annual general meeting and are required to answer any shareholder questions about the conduct of the audit and preparation of the audit report.

Diversity at Sprintex Limited

The Group recognises the value contributed to the organisation by employing people with varying skills, cultural backgrounds, ethnicity and experience and employs people based on their underlying skill sets in an environment where everyone is treated equally and fairly, and where discrimination, harassment and inequity are not tolerated.

Having regard to the size of the Company, the Company does not measure diversity.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2012

	NOTES	2012$	2011$
Sales of goods and services		1,401,179	761,840
Revenue		1,401,179	761,840
Cost of goods sold		(969,100)	(760,318)
Gross profit		432,079	1,522
Other income	5.1	93,915	343,303
Distribution & marketing expenses		(319,189)	(305,011)
Research & development expenses	5.8	(1,607,657)	(1,239,769)
Inventory impairment expense		(1,644,953)	(1,861,102)
Impairment of goodwill	14	(479,136)	-
Administration expenses		(1,895,267)	(1,762,381)
Other expenses	5.2	(227,078)	(156,227)
Operating loss		(5,647,286)	(4,979,665)
Finance income	5.3	14,340	11,986
Finance costs	5.4	(70,104)	(312,058)
Share of loss of joint venture	12	(103,889)	-
Loss before income tax expense		(5,806,939)	(5,279,737)
Income tax benefit	6	615,229	1,041,441
Net loss for the year		(5,191,710)	(4,238,296)
Other comprehensive income, net of taxFair value revaluation of land and buildings		-	61,913
Total comprehensive income for the year		(5,191,710)	(4,176,383)
Loss per share attributable to the ordinary equityholders of the Company
Basic loss per share	7	0.89 cents	1.44 cents
Diluted loss per share	7	0.89 cents	1.44 cents

The Consolidated Statement of Comprehensive Income should be read in conjunction with the Notes to the Financial Statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2012

	NOTES	2012$	2011$
ASSETS
CURRENT ASSETSCash and cash equivalents	21(c)	939,526	596,077
Pledged bank deposits	9	112,000	82,000
Trade and other receivables	10	998,009	1,277,512
Inventories	11	1,069,737	1,556,614
Loan due from a joint venture	12(c)	903,478	-
TOTAL CURRENT ASSETS		4,022,750	3,512,203
NON-CURRENT ASSETS
Investment in a joint venture	12	217,448	-
Property, plant and equipment	13	1,886,793	2,618,620
Goodwill & intellectual property	14	39,111	532,506
TOTAL NON-CURRENT ASSETS		2,143,352	3,151,126
TOTAL ASSETS		6,166,102	6,663,329
CURRENT LIABILITIES
Trade and other payables	15	486,222	333,081
Interest bearing liabilities	16	145,674	388,521
Provisions	17	143,780	111,331
Other liabilities	18	11	4,500
TOTAL CURRENT LIABILITIES		775,687	837,433
NON-CURRENT LIABILITIES
Interest bearing liabilities	16	58,087	49,962
TOTAL LIABILITIES		833,774	887,395
NET ASSETS		5,332,328	5,775,934
EQUITY
Contributed equity	19	38,244,943	33,592,819
Reserves	20	95,980	1,429,287
Accumulated losses		(33,008,595)	(29,246,172)
TOTAL EQUITY		5,332,328	5,775,934

The Consolidated Statement of Financial Position should be read in conjunction with the Notes to the Financial Statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2012

			Reserves
	Contributed	Convertiblenote	Assetrevaluation	Shareoption	Accumulated
CONSOLIDATED ENTITY	equity	equity	reserve	reserve	losses	Total
	Note 19	Note 20 (a)	Note 20 (b)	Note 20 (c)
	$	$	$	$	$	$
Balance at 30 June 2010					(25,007,876)	2,888,379
	26,568,547	41,254	752,154	534,300
Loss for the year	-	-	-	-	(4,238,296)	(4,238,296)
Other comprehensive income	-	-	61,913	-	-	61,913
Total Comprehensive income
for the year	-	-	61,913	-	(4,238,296)	(4,176,383)
Transactions with owners in
their capacity as owners
Issue of shares	3,873,537	-	-	39,666	-	3,913,203
Funds received in advance of
share issue	3,212,115	-	-	-	-	3,212,115
Share issue expenses	(61,380)	-	-	-	-	(61,380)
Balance at 30 June 2011	33,592,819	41,254	814,067	573,966	(29,246,172)	5,775,934
Loss for the year	-	-	-	-	(5,191,710)	(5,191,710)
Other comprehensive income	-	-	-	-	-	-
Total Comprehensive income
for the year	-	-	-	-	(5,191,710)	(5,191,710)
Transactions with owners in
their capacity as owners
Issue of sharesFunds received in advance of	3,597,516	-	-	-	-	3,597,516
share issue	1,196,090	-	-	-	-	1,196,090
Share issue expenses	(141,482)	-	-	-	-	(141,482)
Share based payment				95,980		95,980
Transfer on repayment of
convertible note	-	(41,254)	-	-	41,254	-
Transfer on expiry of options	-	-	(814,067)	-	814,067	-
Transfer on sale of property	-	-	-	(573,966)	573,966	-
Balance at 30 June 2012	38,244,943	-	-	95,980	(33,008,595)	5,332,328

The Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Financial Statements.

CONSOLIDATED STATEMENT OF CASH FLOW

FOR THE YEAR ENDED 30 JUNE 2012

	NOTES	2012$	2011$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers		711,975	506,576
Payments to suppliers and employees		(5,511,307)	(5,043,767)
Interest and finance lease charges paid		(70,104)	(252,046)
Interest received		14,340	11,986
Research & development tax concession received		715,229	671,441
Net cash flows used in operating activities	21(a)	(4,139,867)	(4,105,810)
CASH FLOWS FROM INVESTING ACTIVITIES
Contribution to joint venture entity		(321,337)	-
Payment of secured deposit		(30,000)	-
Proceeds from sale of property, plant and equipment		1,484,191	42,017
Payments for property, plant and equipment		(1,066,940)	(138,199)
Net cash flows (used in) generated from investingactivities		65,914	(96,182)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings		360,278	346,422
Repayment of borrowings		(495,000)	(633,974)
Proceeds from share capital raised		4,693,606	5,071,480
Capital raising costs		(141,482)	(61,380)
Net cash flows generated from financing activities		4,417,402	4,722,548
Net increase in cash and cash equivalents held		343,449	520,556
Cash and cash equivalents at the beginning of thefinancial year		596,077	75,521
Cash and cash equivalents at the end of thefinancial year	21(c)	939,526	596,077

The Consolidated Statement of Cash Flow should be read in conjunction with the Notes to the Financial Statements.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

1. Corporate information

Sprintex Limited (formerly Automotive Technology Group Limited) (the "Company") is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Stock Exchange. The Company's registered office is 183 Mulgul Road, Malaga WA 6090.

The consolidated financial statements of the Company as at and for the year ended 30 June 2012 comprise the Company and its subsidiaries (together referred to as the "Group"). The nature of the operations and principal activities of the Group are described in the Directors' Report.

2. Significant accounting policies

(a) Statement of compliance

This financial report is a general purpose financial report which complies with Australian Accounting Standards (AASBs) (including Australian interpretations) as issued by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001 as appropriate for profit oriented entities. The financial report also complies with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board.

(b) Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for land and buildings which have been measured at fair value.

Apart from the changes in accounting policy noted in notes 2(d) and 2(e) below, the accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities.

Going concern

The Company has net assets of $5,332,328 (2011: $5,775,934) and net current assets of $3,247,063 (2011: $2,674,770) as at 30 June 2012 and incurred a loss of $5,191,710 (2011: $4,238,296) and net operating cash outflow of $4,461,204(2011: $4,105,810) for the year ended 30 June 2012.

The Company's ability to continue as a going concern and meet its debts and future commitments as and when they fall due is dependent on a number of factors, including:

• delivery of existing and new products through the Company's distribution network to generate sales revenues and positive cash flows; and
• the success of the manufacturing facility in Malaysia.

The financial report has been prepared on a going concern basis. In arriving at this position the directors have had regard to the fact that the Company has, or in the directors' opinion will have access to, sufficient cash to fund administrative and other committed expenditure for a period of not less than 12 months from the date of this report.

Should the Company not achieve the matters set out above, there is significant uncertainty whether it will be able to continue as a going concern and therefore whether it will be able to pay its debts as and when they fall due and realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial statements.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

(b) Basis of preparation (cont'd)

The financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts, or to the amounts or classification of liabilities that might be necessary should the Company not be able to continue as a going concern.

(c) Functional and presentation currency

The financial report is presented in Australian dollars, which is the functional currency and the presentation currency of the Company and its Australian subsidiaries.

(d) New accounting policy

During the year the Company invested in a joint venture, which is being accounted for using the equity method of accounting. Please refer to note 2(r) for further details.

(e) Application of new and revised Accounting Standards

The following new and revised Accounting Standards and Interpretations have, where applicable, been adopted in the current year but have had no significant effect on the amounts reported or disclosures.

Amendments to AASB 7 'FinancialInstruments" Disclosure'	The amendments (part of AASB 2010-4 'Further Amendments toAustralian Accounting Standards arising from the Annual ImprovementsProject') clarify the required level of disclosures about credit risk andcollateral held.
Amendments to AASB 101'Presentation of FinancialStatements'	The amendments (part of AASB 2010-4 'Further Amendments toAustralian Accounting Standards arising from the Annual ImprovementsProject') clarify that an entity may choose to present the required analysisof items of other comprehensive income either in the statement of changesin equity or in the notes to the financial statements.
AASB 1054 'Australian AdditionalDisclosures' and AASB 2011-1	AASB 1054 sets out the Australian-specific disclosures for entities thathave adopted Australian Accounting Standards.
'Amendments to AustralianAccounting Standards arising fromTrans-Tasman Convergence Project'	AASB 2011-1 makes amendments to a range of Australian AccountingStandards and Interpretations for the purpose of closer alignment to IFRSsand harmonisation between Australian and New Zealand Standards.
AASB 124 'Related PartyDisclosures' (revised December2009)	AASB 124 (revised December 2009) has been revised on the followingtwo aspects: (a) AASB 124 (revised December 2009) has changed thedefinition of a related party and (b) AASB 124 (revised December 2009)introduces a partial exemption from the disclosure requirements forgovernment-related entities.
AASB 2009-14 'Amendments toAustralian Interpretation –Prepayments of a Minimum FundingRequirement'	Interpretation 114 addresses when refunds or reductions in futurecontributions should be regarded as available in accordance with paragraph58 of AASB 119.
AASB 2009-12 'Amendments toAustralian Accounting Standards'	The application of AASB 2009-12 makes amendments to AASB 8'Operating Segments' as a result of the issuance of AASB 124 'RelatedParty Disclosures (2009).
AASB 2010-5 'Amendments toAustralian Accounting Standards'	The Standard makes numerous editorial amendments to a range ofAustralian Accounting Standards and Interpretations.
AASB 2010-6 'Amendments toAustralian Accounting Standards –Disclosures on Transfers of FinancialAssets'	The application of AASB 2010-6 makes amendments to AASB 7'Financial Instruments – Disclosures' to introduce additional disclosurerequirements for transactions involving transfer of financial assets.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D)

FOR THE YEAR ENDED 30 JUNE 2012

2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(e) Application of new and revised Accounting Standards (cont'd)

New Accounting Standards for Application in Future Periods

The AASB has issued a number of new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods, some of which are relevant to the Group

At the date of the authorisation of the financial statements, the Standards and Interpretations listed below were in issue but not yet effective.

	Effective for annualreporting periodsbeginning on or after	Expected to beinitially applied inthe financial year
Standard/Interpretation		ending
AASB 9 'Financial Instruments', AASB 2009-11 'Amendments to AustralianAccounting Standards arising from AASB 9' and AASB 2010-7 'Amendments toAustralian Accounting Standards arising from AASB 9 (December 2010)'	1 January 2013	30 June 2014
AASB 10 'Consolidated Financial Statements'	1 January 2013	30 June 2014
AASB 11 'Joint Arrangements'	1 January 2013	30 June 2014
AASB 12 'Disclosure of Interests in other Entities'	1 January 2013	30 June 2014
AASB 127 'Separate Financial Statements' (2011)	1 January 2013	30 June 2014
AASB 128 'Investments in Associates and Joint Ventures' (2011)	1 January 2013	30 June 2014
AASB 13 'Fair Value Measurement' and AASB 2011-8 'Amendments to AustralianAccounting Standards arising from AASB 13'	1 January 2013	30 June 2014
AASB 119 'Employee Benefits' (2011) and AASB 2011-10 'Amendments toAustralian Accounting Standards arising from AASB 19 (2011)'	1 January 2013	30 June 2014
AASB 2010-8 'Amendments to Australian Accounting Standards – Deferred Tax:recovery of Underlying Assets'	1 January 2012	30 June 2013
AASB 2011-4 'Amendments to Australian Accounting Standards to RemoveIndividual Key Management Personnel Disclosure Requirements'	1 July 2013	30 June 2014
AASB 2011-7 'Amendments to Australian Accounting Standards arising from theConsolidation and Joint Arrangements standards'	1 January 2013	30 June 2014
AASB 2011-9 'Amendments to Australian Accounting Standards – Presentation ofItems of Other Comprehensive Income'	1 July 2012	30 June 2013
Interpretation 20 'Stripping Costs in the Production Phase of a Surface Mine' andAASB 2011-12 'Amendments to Australian Accounting Standards arising fromInterpretation 20'.	1 January 2013	30 June 2014
AASB 2012-2 'Amendments to Australian Accounting Standards – Disclosures –Offsetting Financial Assets and Financial Liabilities'	1 June 2012	1 January 2013
AASB 2012-3 'Amendments to Australian Accounting Standards – Disclosures –Offsetting Financial Assets and Financial Liabilities'	1 June 2012	1 January 2014
AASB 2012-5 'Amendments to Australian Accounting Standards arising from AnnualImprovements 2009–2011 Cycle '	1 June 2012	1 January 2013

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

3. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(e) Application of new and revised Accounting Standards (cont'd)

The Group has early adopted the following standards, together with the consequential amendments as at 30 June 2012.

− AASB 10: Consolidated Financial Statements, AASB 11: Joint Arrangements, AASB 12: Disclosure of Interests in Other Entities, AASB 127: Separate Financial Statements (August 2011), AASB 128: Investments in Associates and Joint Ventures (August 2011) and AASB 2011-7: Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards [AASB 1, 2, 3, 5, 7, 9, 2009-11, 101, 107, 112, 118, 121, 124, 132, 133, 136, 138, 139, 1023 & 1038 and Interpretations 5, 9, 16 & 17] (applicable for annual reporting periods commencing on or after 1 January 2013).

AASB 10 replaces parts of AASB 127: Consolidated and Separate Financial Statements (March 2008, as amended) and Interpretation 112: Consolidation - Special Purpose Entities. AASB 10 provides a revised definition of control and additional application guidance so that a single control model will apply to all investees. The Group has not yet been able to reasonably estimate the impact of this Standard on its financial statements.

• − AASB 11 replaces AASB 131: Interests in Joint Ventures (July 2004, as amended). AASB 11 requires joint arrangements to be classified as either "joint operations" (whereby the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities) or 'joint ventures" (where the parties that have joint control of the arrangement have rights to the net assets of the arrangement). Joint ventures are required to adopt the equity method of accounting (proportionate consolidation is no longer allowed).
• − AASB 12 contains the disclosure requirements applicable to entities that hold an interest in a subsidiary, joint venture, joint operation or associate. AASB 12 also introduces the concept of a "structured entity", replacing the 'special purpose entity" concept currently used in Interpretation 112, and requires specific disclosures in respect of any investments in unconsolidated structured entities. This Standard will only affect disclosures and is not expected to significantly impact the Group.

To facilitate the application of AASBs 10, 11 and 12, revised versions of AASB 127 and AASB 128 have also been issued. These Standards are not expected to significantly impact the Group.

The Group has decided not to early adopt any of the other new and amended pronouncements. Of the above new and amended Standards and Interpretations the Group's assessment of those new and amended pronouncements that are relevant to the Group but applicable in future reporting periods is set out below:

• − AASB 9: Financial Instruments (December 2010) and AASB 2010-7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and Interpretations 2. 5, 10, 12, 19 & 127] (applicable for annual reporting periods commencing on or after 1 January 2013).
• − These Standards are applicable retrospectively and include revised requirements for the classification and measurement of financial instruments, as well as recognition and derecognition requirements for financial instruments.

The key changes made to accounting requirements include:

• − simplifying the classifications of financial assets into those carried at amortised cost and those carried at fair value;
• − simplifying the requirements for embedded derivatives;
• − removing the tainting rules associated with held-to-maturity assets;
• − removing the requirements to separate and fair value embedded derivatives for financial assets carried at amortised cost;

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(e) Application of new and revised Accounting Standards (cont'd)

• − allowing an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument
• − requiring financial assets to be reclassified where there is a change in an entity's business model as they are initially classified based on: (a) the objective of the entity's business model for managing the financial assets; and (b) the characteristics of the contractual cash flows; and
• − requiring an entity that chooses to measure a financial liability at fair value to present the portion of the change in its fair value due to changes in the entity's own credit risk in other comprehensive income, except when that would create an accounting mismatch. If such a mismatch would be created or enlarged, the entity is required to present all changes in fair value (including the effects of changes in the credit risk of the liability) in profit or loss.

The Group has not yet been able to reasonably estimate the impact of these pronouncements on its financial statements.

− AASB 13: Fair Value Measurement and AASB 2011-8: Amendments to Australian Accounting Standards arising from AASB 13 [AASB 1, 2, 3, 4, 5, 7, 9, 2009-11, 2010-7, 101, 102, 108, 110, 116, 117, 118, 119, 120, 121, 128, 131, 132, 133, 134, 136, 138, 139, 140, 141, 1004, 1023 & 1038 and Interpretations 2, 4, 12, 13, 14, 17, 19, 131 & 132] (applicable for annual reporting periods commencing on or after 1 January 2013).

AASB 13 defines fair value, sets out in a single Standard a framework for measuring fair value, and requires disclosures about fair value measurements.

AASB 13 requires:

• − inputs to all fair value measurements to be categorised in accordance with a fair value hierarchy; and
• − enhanced disclosures regarding all assets and liabilities (including, but not limited to, financial assets and financial liabilities) measured at fair value.

These Standards are not expected to significantly impact the Group.

− AASB 2011-9: Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income [AASB 1, 5, 7, 101, 112, 120, 121, 132, 133, 134, 1039 & 1049] (applicable for annual reporting periods commencing on or after 1 July 2012).

The main change arising from this Standard is the requirement for entities to group items presented in other comprehensive income on the basis of whether they are potentially reclassifiable to profit or loss subsequently.

This Standard affects presentation only and is not expected to significantly impact the Group.

AASB 119 (September 2011) also includes changes to the accounting for termination benefits that require an entity to recognise an obligation for such benefits at the earlier of:

• (i) for an offer that may be withdrawn when the employee accepts;
• (ii) for an offer that cannot be withdrawn when the offer is communicated to affected employees; and
• (iii) where the termination is associated with a restructuring of activities under AASB 137: Provisions, Contingent Liabilities and Contingent Assets, and if earlier than the first two conditions – when the related restructuring costs are recognised.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(e) Application of new and revised Accounting Standards (cont'd)

The Group has not yet been able to reasonably estimate the impact of these changes to AASB 9.

AASB 2012-2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities [AASB 7 & AASB 132]

This Standard amends the required disclosures in AASB 7 to include information that will enable users of an entity's financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with the entity's recognised financial assets and recognised financial liabilities, on the entity's financial position. This Standard also amends AASB 132 to refer to the additional disclosures added to AASB 7 by this Standard.

AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities [AASB 132]

This Standard adds application guidance to AASB 132 to address inconsistencies identified in applying some of the offsetting criteria of AASB 132, including clarifying the meaning of "currently has a legally enforceable right of set-off" and that some gross settlement systems may be considered equivalent to net settlement.

AASB 2012–5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009– 2011 Cycle [AASB 1, AASB 101, AASB 116, AASB 132 & AASB 134 and Interpretation 2]

This standard results from the International Accounting Standards Board's annual improvements project 2009- 2011. The annual improvements project provides a vehicle for making non-urgent but necessary amendments to IFRSs.

The amendments to some Standards result in accounting changes for presentation, recognition or measurement purposes, while some amendments that relate to terminology and editorial changes are expected to have no or minimal effect on accounting. The subjects of the principal amendments to the Standards are set out in the preface to the standard each entity needs to assess the likely impact of any changes.

(f) Basis of consolidation

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The financial statements of subsidiaries are prepared for the same reporting period as the parent Company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist. Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in full in preparing the consolidated financial statements.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The acquisition method of accounting involves recognising at acquisition date, separately from goodwill, the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. The identifiable assets acquired and the liabilities assumed are measured at their acquisition date fair values (see note 2(f)).

The difference between the above items and the fair value of the consideration (including the fair value of any preexisting investment in the acquiree) is goodwill or a discount on acquisition.

A change in the ownership interest of a subsidiary that does not result in a loss of control, is accounted for as an equity transaction.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D)

FOR THE YEAR ENDED 30 JUNE 2012

2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(f) Basis of consolidation (cont'd)

Non-controlling interests are allocated their share of net profit after tax in the statement of comprehensive income and are presented within equity in the consolidated statement of financial position, separately from the equity of the owners of the parent.

Losses are attributed to the non-controlling interest even if that results in a deficit balance.

If the Group loses control over a subsidiary, it

• Derecognises the assets (including goodwill) and liabilities of the subsidiary.
• Derecognises the carrying amount of any non-controlling interest.
• Derecognises the cumulative translation differences recorded in equity.
• Recognises the fair value of the consideration received.
• Recognises the fair value of any investment retained.
• Recognises any surplus or deficit in profit or loss.
• Reclassifies the parent's share of components previously recognised in other comprehensive income to profit or loss.

There is no non-controlling interest in any subsidiary of the Group.

(g) Business combinations

Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination shall be measured at fair value, which shall be calculated as the sum of the acquisition date fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree and the equity issued by the acquirer, and the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition-related costs are expensed as incurred.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the Group's operating or accounting policies and other pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer's previously held equity interest in the acquiree is remeasured at fair value as at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with AASB 139 either in profit or loss or in other comprehensive income. If the contingent consideration is classified as equity, it shall not be remeasured.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D)

FOR THE YEAR ENDED 30 JUNE 2012

2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(h) Operating segments

An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available. This includes start up operations which are yet to earn revenues. Management will also consider other factors in determining operating segments such as the existence of a line manager and the level of segment information presented to the board of directors.

Operating segments have been identified based on the information provided to the chief operating decision makers, being the executive management team.

The Company is operating in one segment, being the manufacture and distribution of the patented range of Sprintex® superchargers.

(i) Foreign currency translation

Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities are retranslated at the rate of exchange ruling at the reporting date. All exchange differences in the financial report are taken to the profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction.

(j) Revenue recognition

Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised.

Sale of Goods

Revenue is recognised when the significant risks and rewards of the goods have passed to the buyer and can be measured reliably. Risks and rewards are considered passed to the buyer at the time of delivery of the goods to the customer.

Interest

Revenue is recognised as the interest accrues using the effective interest method.

Effective interest method is a method of calculating the annualised cost of a financial asset or liability and allocating the interest income or expense over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial instrument to the net carrying amount of the financial asset or liability.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(k) Income tax

Current tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the current period's taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Deferred tax

Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except:

• where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit; or
• When the taxable temporary differences are associated with investments in subsidiaries, associates and interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:

• when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
• when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax assets and deferred tax liabilities shall be offset only if:

• (a) there is a legally enforceable right to set-off current tax assets against current tax liabilities; and
• (b) the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
  • (i) the same taxable entity; or
  • (ii) different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantially enacted at the reporting date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(k) Income tax (cont'd)

Tax consolidation legislation

The Company and its wholly-owned Australian controlled entities implemented the tax consolidation legislation as of 1 July 2004.

The head entity, Sprintex Limited and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. The Company has applied the group allocation approach in determining the appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated group.

In addition to its own current and deferred tax amounts, the Company also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.

(l) Other taxes

Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax ("GST") except:

• (a) where the GST on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• (b) Receivables and payables are stated with amounts of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

Cash flows are included in the Statement of Cash Flow on a gross basis and the GST component of cash flows arising from investing and financial activities, which are recoverable from, or payable to, the taxation authority, are classified as operating cash flows.

Commitments or contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(m) Loss per share

Basic loss per share

Basic loss per share is determined by dividing net profit after income tax attributable to members of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

Diluted loss per share

Diluted loss per share adjusts the figures used in the determination of basic loss per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D)

FOR THE YEAR ENDED 30 JUNE 2012

2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(n) Cash and cash equivalents

Cash and short-term deposits in the statement of financial position comprise cash at bank and in hand and short-term deposits with an original maturity date of twelve months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Bank overdrafts are included within interest-bearing liabilities in current liabilities on the statement of financial position.

(o) Trade and other receivables

Trade receivables, which generally have 0-30 day terms are recognised initially at fair value and subsequently measured at amortised cost using effective interest method, less an allowance for impairment.

Collectability of trade receivables is reviewed on an ongoing basis at an operating unit level. Individual debts that are known to be uncollectible are written off when identified. An impairment provision is recognised when there is objective evidence that the Company will not be able to collect the receivable. Financial difficulties of the debtor, default payments or debts more than 60 days overdue are considered objective evidence of impairment. The amount of the impairment loss is the receivable carrying amount compared to the present value of estimated future cash flows, discounted at the original effective interest rate.

(p) Inventories

Inventories are valued at the lower of cost or net realisable value. Costs incurred in bringing each product to its present location and conditions are accounted for as follows:

Raw materials – purchase cost on a first in, first out basis.

Finished goods and work in progress – cost of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs. Costs are assigned on a first in, first out basis.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

(q) Investments and other financial assets

Investments and financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are categorised as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Designation is re-evaluated at each financial year end, but there are restrictions on reclassifying to other categories.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of assets not at fair value through profit or loss, directly attributable transaction costs.

Recognition and derecognition

All regular way purchases and sales of financial assets are recognised on the trade date ie the date that the Company commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the market place. Financial assets are derecognised when the right to receive cash flows from the financial assets have expired or been transferred.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D)

FOR THE YEAR ENDED 30 JUNE 2012

2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(q) Investments and other financial assets (cont'd)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired. These are included in current assets, except for those with maturities greater than 12 months after reporting date, which are classified as non-current.

(r) Joint arrangements

Joint arrangements are classified as either a joint operation or a joint venture, based on the rights and obligations arising from the contractual obligations between the parties to the arrangement. To the extent the joint arrangement provides the Group with rights to the net assets of the arrangement, the investment is accounted for using the equity method. To the extent the joint arrangement provides the Group with rights to the individual assets and obligations arising from the joint arrangements, the Group recognises it's share of assets, liabilities, revenues and expenses of the operation.

The Company has an investment in a joint venture. The Company's investment in the joint venture is accounted for using the equity method of accounting as the joint venture provides the Group with rights to the net assets of the joint venture.

Under the equity method, investments in a joint venture are carried in the consolidated statement of financial position at cost plus post-acquisition changes in the Company's share of net assets of the joint venture. Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. After application of the equity method, the Company determines whether it is necessary to recognise any impairment loss with respect to the Company's net investment in joint ventures. Goodwill included in the carrying amount of the investment a joint venture is not tested separately, rather the entire carrying amount of the investment is tested for impairment as a single asset. If impairment is recognised, the amount is not allocated to the goodwill of the joint venture.

The Company's share of the joint venture's profits of losses is recognised in the statement of comprehensive income, and its share of movement in reserves is recognised in reserves. The cumulative movements are adjusted against the carrying amount of the investment. Dividends receivable from joint ventures are recognised in the Company's statement of comprehensive income as a component of other income.

After application of the equity method, the Company determines whether it is necessary to recognise an additional impairment loss on the Company's investment in its joint venture. The Company determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Company calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in the "share of profit of joint arrangements" in the consolidated statement of comprehensive income.

When the Company's share of losses of a joint venture equals or exceeds its interest in the joint venture, including any unsecured long-term receivables and loans, the Company does not recognise further losses, unless it has an incurred obligations or made payments on behalf of the joint arrangement.

The reporting dates of the joint venture and the Company are identical and the joint venture's accounting policies conform to those used by the Company for like transactions and events in similar circumstances.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(s) Property, plant and equipment

Recognition

Plant and equipment and leasehold improvements are carried at cost, less accumulated depreciation/amortisation and any impairment in value. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation. All other repairs and maintenance are recognised in profit or loss as incurred.

Land and buildings are measured at fair value, based on periodic but at least triennial valuations by external independent valuer who apply the International Valuations Standards Committee's International Valuation Standards, less accumulated depreciation on buildings and less any impairment losses recognised after the date of the revaluation.

Depreciation & amortisation

Depreciation is calculated on a diminishing value basis over the estimated useful life of the asset as follows:

Buildings: 2.5% Building Improvements: 0-30% Plant and Equipment: 15% Engineering Equipment and Software: 15-37.5% Furniture and Office Equipment: 7.5-37.5% Motor Vehicles: 18.75% Leasehold Improvements: 30%

The assets' residual values, useful lives and amortisation method are reviewed, and adjusted if appropriate, at each financial year end.

Revaluations of land and buildings

Any revaluation increment is credited to the asset revaluation reserve included in equity, except to the extent that it reverses a revaluation decrement for the same asset previously recognised in profit or loss, in which case the increment is recognised in profit or loss. Any revaluation decrement is recognised in profit or loss, except to the extent that it offsets a previous revaluation increment for the same asset, in which case the decrement is debited directly to the asset revaluation reserve to the extent of the credit balance existing in the revaluation reserve for that asset.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amounts of the assets and the net amounts are restated to the revalued amounts of the assets.

Gains and losses on disposal are determined by comparing proceeds with the carrying amount. These are included in the profit or loss within the statement of comprehensive income.

Upon disposal or derecognition, any revaluation reserve relating to the particular asset being sold is transferred to retained earnings.

Derecognition

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D)

FOR THE YEAR ENDED 30 JUNE 2012

2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(t) Leases

Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership.

Operating leases

The minimum lease payments made under operating leases are charged against profit or loss in equal instalments over the accounting periods covered by the lease term where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased item.

The cost of improvements to or on leasehold property is capitalised, disclosed as leasehold improvements and amortised over the shorter of the estimated useful life of the asset or the lease term.

Finance leases

Leases which effectively transfer substantially all of the risks and rewards incidental to ownership of the leased item to the Company are capitalised at the inception of the lease at the fair value of the leased asset, or, if lower, at the present value of the minimum lease payments and disclosed as property, plant and equipment under lease. A lease liability of equal value is also recognised.

Capitalised lease assets are depreciated over the shorter of the estimated useful life of the assets and the lease term. Minimum lease payments are allocated between interest expense and reduction of the lease liability with the interest expense calculated using the interest rate implicit in the lease and recognised directly in net profit.

(u) Impairment of non-financial assets other than goodwill

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

At each reporting date, management assess whether there is any indication that an asset may be impaired, where an indicator of impairment exists, management makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.

Recoverable amount is the greater of fair value less cost to sell and value in use. It is determined for an individual asset, unless the asset's value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash- generating unit to which the asset belongs. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the asset.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D)

FOR THE YEAR ENDED 30 JUNE 2012

2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(v) Goodwill and intangibles

Goodwill

Goodwill acquired in a business combination is initially measured at cost being the excess of the costs of the business combination over the Company's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.

Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate the carrying value may be impaired.

For the purpose of impairment testing, goodwill acquired in business combination is, from the acquisition date, allocated to each of the Company's cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Company are assigned to those units or groups of units. Each unit or group of units to which the goodwill is so allocated represents the lowest level within the Group at which the goodwill is monitored for the internal management purposes; and is not larger than an operating segment determined in accordance with AASB 8. The Company operates in one cash-generating unit and therefore goodwill was allocated to the Company as a whole.

Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill related. When the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised.

When goodwill forms part of a cash-generating unit (group of cash-generating units) and an operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this manner is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Impairment losses recognised for goodwill are not subsequently reversed.

Intangibles

Intangible assets acquired separately or in a business combination are initially measured at cost. The cost of an intangible asset acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is recognised in profit or loss in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful life and tested for impairment whenever there is an indication that the intangible asset may be impaired (see note 2(s) for methodology). The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for prospectively by changing the amortisation period or method, as appropriate, which is a change in accounting estimate. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the function of the intangible asset.

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cashgenerating unit level consistent with the methodology outlined for goodwill above. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed each reporting period to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for as a change in an accounting estimate and is thus accounted for on a prospective basis.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(v) Goodwill and intangibles (cont'd)

Research and development costs

Research costs are expensed as incurred. An intangible asset arising from development expenditure on an internal project is recognised only when the Company can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the development and the ability to measure reliably the expenditure attributable to the intangible asset during its development. Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Any expenditure so capitalised is amortised over the period of expected benefit from the related project.

The carrying value of an intangible asset arising from development expenditure is tested for impairment annually when the asset is not yet available for use, or more frequently when an indication of impairment arises during the reporting period.

The Company's intangible asset represents acquired intellectual property – patents are amortised over the remaining life on a straight line basis.

(w) Trade and other payables

Trade and other payables are carried at amortised cost. Due to their short term nature they are not discounted. They represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.

(x) Interest-bearing loans and borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Fees paid on the establishment of loan facilities that are yield related are included as part of the carrying amount of the loans and borrowings.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

(y) Borrowing costs

Borrowing costs are recognised as an expense when incurred, except where they are directly attributable to the acquisition or construction of qualifying assets (i.e. an asset that necessarily takes a substantial period of time to get ready for its intended use or sale), in which case they are capitalised as part of the cost of that asset. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. The Company does not currently hold qualifying assets.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D)

FOR THE YEAR ENDED 30 JUNE 2012

2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(z) Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Where the Company expects some or all of a provision to be reimbursed, for example under and insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the profit or loss net of any reimbursement.

If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Service warranties

Provision is made for the estimated liability on all products still under warranty at reporting date. The amount of the provision is the present value of the estimated cash flows expected to be required to settle the warranty obligations, having regard to the service warranty experience over the last two years and the risks of the warranty obligations. The provision is not discounted to its present value as the effect of discounting is not material.

(aa) Employee leave benefits

Wages, salaries, annual leave and non-monetary benefits

Provision is made for the employee benefits accumulated as a result of the employee rendering services up to the reporting date. These benefits including on costs due to be settled within one year, together with benefits arising from wages and salaries, annual leave and non-monetary benefits which will be settled after one year, are measured at their nominal amounts based on remuneration rates which are due to be paid when the liability is settled.

Long service leave

Long service leave including on costs, payable later than one year have been measured at the present value of estimated future cash outflows to be made for those benefits using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

Retirement benefit obligations

The Company contributes to various superannuation plans in accordance with and at rates set down by law. Some employees contribute to these plans at differing percentages of their salaries.

The Company's contributions and costs are charged as an expense as incurred.

(ab) Share based payment transactions

The Company provides incentives to the key management personnel (KMP) of the Company in the form of share based payment transactions, whereby KMP render services in exchange for shares or rights over shares ("equity settled transactions").

The cost of these equity settled transactions with employees is measured by reference to the fair value at the date at which they are granted. An external valuer using Black Scholes model determines the fair value, which takes into account the factors including the option exercise price, the current level and volatility of the underlying share price, the risk-free interest rate, expected dividends on the underlying share, current market price of the underlying share, the expected life of the option, and any barriers associated with vesting.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D)

FOR THE YEAR ENDED 30 JUNE 2012

2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(ab) Share based payment transactions (cont'd)

The fair value of equity settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the option ('vesting date').

The cumulative expense recognised for equity settled transactions at each reporting date until vesting reflects:

• (a) the grant date fair value of the award,
• (b) the extent to which the vesting period has expired, and
• (c) the number of options that, in the opinion of the Directors of the Company, will ultimately vest. This opinion is formed based on the best available information at reporting date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.

No expense is recognised for options that do not ultimately vest, except for options where vesting is conditional upon a market condition.

Where the terms of an equity settled option are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification.

Where an equity settled option is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the option is recognised immediately. However, if a new option is substituted for the cancelled option, and designated as a replacement option on the date that it is granted, the cancelled and new option are treated as if they were a modification of the original option, as described in the previous paragraph.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share.

Equity-settled share-based payments transactions with other parties are measured at the fair value of the goods or services received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

(ac) Contributed equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(ad) Change in presentation

Costs of $1,062,494 associated with the production of products from the research and development facility in Perth which exceeded net realisable value were reclassified in 2011 from research and development expenses to inventory impairment expense.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

3. Significant accounting estimates, assumptions and judgements

The preparation of the financial statements requires management to make judgements, estimates and assumptions in relation to assets, liabilities, contingent liabilities, revenue and expenses that affect the reported amounts in the financial statements. Estimations and judgements are continually evaluated by management and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

(a) Significant accounting judgements

The following are the critical judgements that the directors have made in the process of applying the entity's accounting policies and that have the most significant effect of the amounts recognised in financial statements:

Impairment of non-financial assets other than goodwill

The Company assesses impairment of all assets including intangible assets with definite useful lives at each reporting date by evaluating conditions specific to the Company and to the particular asset that may lead to impairment. These include product and manufacturing performance, technology, economic and political environments and future product expectations. If an impairment trigger exists the recoverable amount of the asset is determined. Given the current uncertain economic environment, these assets have been tested for impairment in this financial period.

Taxation

The Company's accounting policy for taxation requires management's judgement in assessing whether deferred tax assets and certain deferred tax liabilities are recognised on the statement of financial position. Deferred tax assets, including those arising from unrecouped tax losses, capital losses and temporary differences, are recognised only where it is considered more likely than not that they will be recovered, which is dependent on the generation of sufficient future taxable profits.

Assumptions about the generation of future taxable profits and repatriation of retained earnings depend on management's estimates of future cash flows. These depend on estimates of future production and sales volumes, operating costs, capital expenditure, dividends and other capital management transactions. Judgements are also required about the application of income tax legislation. These judgements and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities in respect of tax losses and temporary differences not yet recognised. In such circumstances, some or all of the carrying amounts of unrecognised deferred tax assets and liabilities may require adjustment, resulting in a corresponding credit or charge to the profit or loss.

(b) Significant estimates and assumptions

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are:

Estimation of provisions for obsolete inventory

The Company estimates the recoverable value of inventory by references to expected future selling prices and where these are lower that the cost of the inventory, reduces the value of inventory to the expected selling price less selling cost.

Revaluation of property

Prior to the sale of it's property, the Company estimates the value of its building by reference to the selling prices of comparable buildings as guided by an independent valuer.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

3. Significant accounting estimates, assumptions and judgements (cont'd)

(b) Significant estimates and assumptions (cont'd)

Impairment of goodwill

The Company determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash-generating units, using a value in use discounted cash flow methodology, to which the goodwill is allocated. An impairment expense of $479,136 was recognised in the current year. The assumptions used in this estimation of recoverable amount and the carrying amount of goodwill are discussed in note 14.

Warranty provision

In determining the level of provision required for product warranties the Company has made judgements in respect of the expected performance of the product, number of customers who will actually use the warranty and how often, and the costs of fulfilling the performance of the service warranty. Historical experience and current knowledge of the performance of products has been used in determining this provision. The related carrying amounts are disclosed in note 17. Any increase or decrease in the provision would affect profit or loss in future years.

Research and Development tax concession

The Company's accounting policy for research and development tax claim requires management's judgement in assessing whether the tax claim is probable. Historical experience of the success of prior years' claims has been used in determining the amount recognised in the profit or loss as research and development tax benefit.

4. Segment information

(a) Identification of reportable segments

The Company identifies its operating segments based on the internal reports that are reviewed and used by the executive management team (chief operating decision makers) in assessing performance and in determining the allocation of resources. Operating segments are identified by management based on the similarity of the products produced and sold.

The Company is operating in one segment, being the manufacture and distribution of the patented range of Sprintex® superchargers.

The accounting policies applied for internal reporting purposes are consistent with those applied in the preparation of the financial statements.

(b) Geographic information and major customers

	2012$	2011$
Malaysia	919,947	-
Australia	210,591	335,282
United States	108,674	155,350
The Netherlands	32,960	-
Indonesia	23,551	15,869
Spain	23,250	-
United Kingdom	18,460	15,869
Germany	8,825	5,208
Japan	8,082	25,866
China	7,416	122,301
Other countries	39,423	86,095
Total revenue	1,401,179	761,840

NOTES TO THE FINANCIAL STATEMENTS (CONT'D)

FOR THE YEAR ENDED 30 JUNE 2012

4. Segment information (cont'd)

The revenue information above is based on the location of the customer. 66% of sales revenues during the year were to the Company's joint venture (see notes 12 and 23). During 2011, 15% of sales were to a single dealer in the United States.

(c) Location of non-current assets

Non-current assets for this purpose consist of property, plant and equipment and intangible assets. All non-current assets of the Company are located in Australia.

5.1Other incomeExport market development grant66,059343,303Insurance recovery27,856-93,915343,3035.2Other expensesShare based payments95,98062,726Loss on disposal of property, plant and equipment, net36,2501,154Net foreign exchange loss5,83126,348Provision for receivables impairment89,01765,999Total other expenses227,078156,2275.3Other revenueInterest income14,34011,9865.4Finance costsInterest and finance charges paid70,104103,366Convertible note interest-208,69270,104312,058Total finance costs5.5Employee payments including benefits expenseSalaries and wages1,582,8791,730,024Superannuation expense99,068140,888Annual leave and long service leave(12,615)(45,218)Other employment expense66,33880,7031,735,6701,906,3975.6Depreciation and amortisation expensesDepreciation of property, plant and equipment250,658237,724Amortisation for leasehold improvements27,66823,536Amortisation for trademarks and patents14,25914,220Total depreciation and amortisation292,585275,4805.7Operating lease expense181,794181,4375.8Research & Development ExpenseResearch & Development staff costs449,285530,831Consult costs200,154195,489Materials / service costs958,218513,4491,607,6571,239,769	5.	Revenue and expenses	2012$	2011$

NOTES TO THE FINANCIAL STATEMENTS (CONT'D)

FOR THE YEAR ENDED 30 JUNE 2012

(a)Income tax creditThe major components of income tax credit are:
Current income taxResearch and development tax benefit600,000Adjustment in respect of current income tax of previous years15,229615,229	700,000341,4411,041,441
Deferred income taxRelating to origination and reversal of temporary differences-Recognition of tax losses-615,229	--1,041,441
(d)Numerical reconciliation between aggregate tax creditrecognised in the income statement and tax expensecalculated per the statutory income tax rate
Loss before income tax expense(5,806,939)	(5,279,737)
Income tax calculated at statutory tax rate of 30% (2011: 30%)1,742,082Tax effect of amounts which are not deductible in calculating	1,583,921
taxable income24,210	12,101
Share based payments28,794	18,818
Tax effect of amounts which are not assessable in calculatingtaxable income(90,644)	(76,298)
Tax losses and temporary differences not recognised(1,704,441)	(1,538,542)
Research and development tax benefit – prior year adjustment15,229	341,441
Research and development tax benefit600,000	700,000
Aggregate income tax benefit615,229	1,041,441

The franking account balance at year end was $Nil (2011: $Nil)

(e) Unrecognised temporary differences

At 30 June 2012, there are no unrecognised temporary differences associated with the Company's investments in subsidiaries as the Company has no liability for additional taxation should unremitted earnings be remitted (2011: $nil).

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

6. Income tax (cont'd)

(d) Deferred tax assets and liabilities

At 30 June 2012, the Company has unused tax losses of $29,836,041 (2011: $24,569,144) available for offset against future taxable profits. Such losses may be carried forward indefinitely subject to meeting relevant statutory tests.

A net deferred tax asset of $421,132 (2011: $263,605) arises from temporary differences but has not been recognised due to the unpredictability of future profit streams. Deferred income tax at 30 June relates to the following:

	2012	2011
	$	$
(i) Deferred tax assets
Provision for doubtful debts	28,594	7,800
Provision for unused annual leave	14,341	17,790
Provision for unused long service leave	584	752
Warranty provisions	27,864	14,858
Superannuation payable	9,663	11,931
Provision for inventory diminution	307,168	230,529
Accrued expenses	32,918	37,486
Unrealised foreign exchange losses	-	4,880
Gross deferred tax assets	421,132	326,026
Deferred tax asset not recognised	(421,132)	(326,026)
	-	-
(ii) Deferred tax liabilities
Prepayments	27,634	28,977
Accelerated depreciation: leasehold improvements, plant &
equipment, motor vehicles	21,337	33,444
Gross deferred tax liabilities	48,971	62,421
Deferred tax liabilities not recognised	(48,971)	(62,421)
	-	-

NOTES TO THE FINANCIAL STATEMENTS (CONT'D)

FOR THE YEAR ENDED 30 JUNE 2012

7. Loss per share

The calculation of basic loss per share is based on the net loss from ordinary activities attributable to equity holders of the Company for the year of $5,191,710 (2011: $4,238,296) and the weighted average of 582,098,257 (2011: 294,745,156) ordinary shares in issue during the year.

The diluted loss per share amount for the year was the same as the basic loss per share, as the Company did not have any share options outstanding (note 19(b)), and the outstanding performance rights are anti-dilutive at 30 June 2012.

Transactions involving ordinary shares or potential ordinary shares that would change the number of ordinary shares or potential ordinary shares outstanding between the reporting date and the date of the completion of these financial statements are disclosed in notes 19 and 29 to the financial statements.

		2012$	2011$
8.	Remuneration of auditors
	Auditors of the Company:
	Audit and review of the financial report – PKF Mack & Co.	30,000	-
	Audit and review of the financial report – Ernst &Young	-	61,593

The independent auditor did not provide any other services during 2012 or 2011.

9. Pledged bank deposits

Pledged bank deposits at 30 June 2012 represented a fixed deposit for a term of 6 months maturing on 27 October 2012, bearing interest at 6.0% per annum and is pledged against a guarantee in the amount of $82,000 issued by a bank on behalf of the Company and an at call deposit of $30,000 supporting credit card facilities. Pledged bank deposits at 30 June 2011 represented fixed deposits for terms of 2 months and bear interest at a weighted average rate of 6.0% per annum. The deposits were pledged against an operating lease facility granted to the Company (note 26(a)).

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

10.	Trade and other receivables	2012$	2011$
	Trade receivables	163,584	201,397
	Allowance for impairment loss	(95,313)	(25,999)
		68,271	175,398
	Other receivables	650,028	783,316
	Trade deposits	187,596	222,209
	Prepayments	92,114	96,589
		998,009	1,277,512

(a) Allowance for impairment loss

Trade receivables are non- interest bearing and are generally on 0-90 day terms. An allowance for impairment loss is recognised when there is objective evidence that an individual trade receivable is impaired.

Movements in the provision for impairment loss were as follows:

At 1 July	25,999	-
Charge for the year	90,246	25,999
Utilisation of provisions	(20,932)	-
At 31 December	95,313	25,999

The ageing analysis of trade receivables that are neither individually nor collectively considered to be impaired are as follows:

Neither past due nor impaired	52,594	15,622
Less than 1 month past due	-	4,183
1 to 3 months past due	-	87,627
Over 3 months past due	15,677	67,966
	68,271	175,398

Trade receivables that were neither past due nor impaired relate to a range of customers for whom there was no recent history of default.

Trade receivables that were past due but not impaired relate to a number of independent customers that have a good track record with the Company. Based on past experience, management believes that no impairment allowance is necessary in respect of these balances as there have not been a significant change in credit quality and the balances are still considered fully recoverable. The Company does not hold any collateral over these balances.

(b) Other receivables

Other receivables mainly represent a research and development tax concession receivable and are considered fully recoverable.

Trade deposits represent payments to suppliers with no history of unsatisfactory product quality or delivery default and are considered fully recoverable.

(c) Fair value and credit risk

Due to the short-term nature of the receivables, their carrying value is assumed to approximate their fair value

NOTES TO THE FINANCIAL STATEMENTS (CONT'D)

FOR THE YEAR ENDED 30 JUNE 2012

10. Trade and other receivables (cont'd)

(d) Foreign exchange and interest rate risk

Details regarding foreign exchange and interest rate risk exposure is disclosed in note 28.

		2012$	2011$
11.	Inventories
	Work in progress – at net realisable value	2,449	146,277
	Finished goods – at net realisable value	1,067,288	1,410,337
	Total inventories at lower of cost andnet realisable value	1,069,737	1,556,614

Work in progress and finished goods are net of a provision for losses of $1,023,893 (2011: $768,431) to write down inventory to net realisable value.

During the year $255,463 (2011: $798,608) was recognised as an expense for inventories carried at net realisable value.

12. Investment in a joint venture

Interests in joint venture are accounted for using the equity method of accounting. Information relating to the joint venture is set out below:

(a) Investment details 2012

Unlisted
Proreka Sprintex Sdn. Bhd.	Investment	50% Interest	217,448	-
			217,448	-

$

The principal activity is the production of superchargers

(b) Movements in the carrying amount of the Company's investment in a joint venture

Proreka Sprintex Sdn. Bhd.
At beginning of year
New investment	321,337	-
Share of losses	(103,889)	-
	217,448	-

(c) Loan due from a joint venture

Proreka Sprintex Sdn. Bhd. (note i)	903,478	-

(i) The loan to the joint venture is interest free. Repayment is expected to be via the receipt of inventory manufactured by the joint venture.

2011 $

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

12. Investment in a joint venture (cont'd)

(d) Share of interest in a joint venture

Share of assets and liabilities

Current assetsNon-current assets	541,992970,625	--
Total assets	1,512,617	-
Current liabilities	1,283,641	-
Non-current liabilities	11,528
Total liabilities	1,295,169
Net assets	217,448	-
Share of revenue, expenses and results
Revenue	-	-
Expenses	(103,889)	-
Net loss	(103,889)	-

13. Property, plant and equipment

Prior to their sale on 31 May 2012, the Company engaged Quantia Pty Limited, an accredited independent valuer that uses the International Valuation Standards Committee's International Valuation Standards as a reference, to determine the fair value of its land and buildings. Fair value is the amount for which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm's length transaction as at the valuation date. Fair value is determined by direct reference to recent market transactions on arm's length terms for land and buildings comparable in size and location to those held by the Company, and to market based yields for comparable properties. The effective date of the revaluation was 30 June 2011.

S P R I N T E X L I M I T E D A N D C O N T R O L L E D E N T I T I E S NOTES TO THE FINANCIAL STATEMENTS (CONT'D)

FOR THE YEAR ENDED 30 JUNE 2012

13. Property, plant & equipment (cont'd)

	holdLease	d&Lan	ildingBu	Mafacingturnulan&tp	EnineinggerEqip&ntume		OfficeituFurnre
At302010	Imentprovems	ildingBus	Imentprovems	ipEqntmeu	Software	hiclesMoVetor	&ipEqntmeu	lTota
JuneCofair vluest o	250,708	1,250,244	268,466	1,528,101	286,804	256,313	270,822	4,318,658
raAclatddepiation	(172,254)		(68,711)	(686,133)	(171,937)	(112,807)	(176,677)	(1,595,719)
cumuerec		-
Nebok attomoun	78,454	1,250,244	199,755	841,968	114,867	143,506	94,145	2,722,939
302011YededJuarenne
Opingbok attenneomoun	8,4547	1,250,244	199,557	841,968	114,867	143,506	94,145	2,22,9397
luaionincRetentvarem	-	61,913	-	-	-	-	-	61,913
Additions	-		-	31,763	33,211	41,062	32,163	138,199
Displs,tosane	-	-	-	(1,216)	(51)	(41,147)	(757)	(43,171)
Deiationhapreccrge	(23,536)	-	(11,915)	(127,520)	(37,872)	(25,185)	(35,232)	(261,260)
Closingbok attneomoun	54,918	1,312,157	187,840	744,995	110,155	118,236	90,319	2,618,620
At30Ju2011ne
fair vlueCost ora	520,708	51,312,17	66628,4	556,651,1	5319,88	194,480	6300,87	4,410,424
Aclatddepiationcumuerec	(195,790)	-	(80,626)	(811,656)	(209,730)	(76,244)	(210,557)	(1,791,804)
Nebok attomoun	54,918	1,312,157	187,840	744,995	110,155	118,236	90,319	2,618,620
302012YededJuarenne
Opingbok attenneomoun	54,918	1,312,157	188407,	44,9957	110,155	118,235	90,319	2,618,619
lasificaionAsResettetcs, n	528,40	-	5(28,40)	-	-	-	-	-
Reluaioninctentvarem	-	-	-	-	-	-	-	-
Additions	37,543	-	3,600	918,084	2,250	68,923	5,936	1,036,336
ispls,Dtosane	-	(1,312,15)7	(152,916)	(2,153)	-	(20,356)	(2,256)	(1,498,838)
iationhaDepreccrge	(2668)7,	-	(10,119)	(148,34)7	(33,518)	(201)7,7	(30,946)	(28,326)7
Closingbok attneomoun	93,198	-	-	1,512,552	8,8877	139,101	63,053	1,886,917
At30Ju2012ne
Cofair vluest ora	328,228	-	-	2,466,755	322,136	218,729	300,985	3,636,833
Aclatddepiationcumuerec	(235,030)	-	-	(954,203)	(243,249)	(79,628)	(237,932)	(1,750,042)
Nebok attomoun	93,198	-	-	1,512,552	78,887	139,101	63,053	1,886,791

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

		2012$	2011$
14.	Goodwill & intellectual property
	Intellectual Property – Sprintex® Technology	39,111	53,370
	Goodwill (note i)	-	479,136
		39,111	532,506

Intellectual property – Sprintex® Technology represents patents. Intellectual property is carried at cost less accumulated amortisation and impairment losses. The patents have been granted terms up to January 2013 or January 2014 by the relevant government agencies with the option of renewal without significant cost at the end of this period.

Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are expected to benefit from that business combination. The Company operates in one CGU and therefore goodwill was allocated to the Company as a whole.

The Company considered that the goodwill was fully impaired as the projections forecast in the prior year were not achieved and therefore resulted in an impairment expense of $479,136 being recognised.

In prior years, the recoverable amount of the Company has been determined based on the value in use calculations using cash flow projections based on financial budgets approved by management covering a five-year period. The pre-tax discount rate applied to cash flow projections is 14.75%. Cash flows beyond the five year period are extrapolated using a pricing growth rate of 3%.

(i) Movements in the carrying amount of goodwill

	At beginning of yearImpairmentAt end of year	479,136(479,136)-	479,136-479,136
15.	Trade and other payables	2012$	2011$
	Trade payablesOther payables and accruals	161,853324,369486,222	112,616220,465333,081

Trade payables are non-interest bearing and are predominately settled on 30 day terms.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

16. Interest bearing borrowings

Current
Insurance premium funding (unsecured) (note a)	85,372	68,627
Finance lease liabilities (note b)	55,478	50,545
Loans from related parties (note c)	4,824	269,349
	145,674	388,521
Non-current
Finance lease liabilities (note b)	58,087	49,962

• (a) Insurance premium funding is unsecured and due for repayment over 10 equal instalments. The effective interest rate of the loan was 8.50% (2011: 7.6%) per annum.
• (b) The average effective interest rate on finance lease liabilities approximated 8.66% (2011: 11.2%) per annum in the year. The carrying value of leased plant and equipment as at 30 June 2012 was $201,901 (2011: $162,699). Other details of finance lease liabilities are disclosed in note 26.

(c) Loans from related parties

Loans from related parties represented unsecured loans from three shareholders in 2011 of $225,877 bore interest of 9% and the balance was interest free and are repayable on demand.

17. Provisions

Provision for warranty	92,879	49,527
Provision for employee benefits	50,901	61,804
	143,780	111,331

Movements in the provision for warranty for the Company during the financial year are set out below:

At 1 July	49,527	32,043
Provision made during the year	63,097	47,034
Utilisation of provisions	(19,745)	(29,550)
At 30 June	92,879	49,527

Warranty provision

Under the terms of the Company's sales arrangements, the Company will rectify any product defects arising within one year of the date of sale. Provision is therefore made for the present value of the management's best estimate of the expected settlement under these agreements in respect of sales made within the year prior to the reporting date. The estimate has been made on the basis of the Company's historical warranty trends and industry averages for defective products and is only made where a warranty claim is probable.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

		2012$	2011$
18.	Other liabilities
	Amounts due to directors	11	4,500

Amounts due to directors represented accrued management remuneration and expenses paid by the directors on the Company's behalf. The amounts were unsecured, interest free and repayable on demand.

19. Contributed equity

Paid up capital – ordinary shares	38,075,634	31,264,356
Capital raising costs capitalised	(1,026,781)	(883,652)
	37,048,853	30,380,704
Subscription proceeds – shares to be issued	1,196,090	3,212,115
	38,244,943	33,592,819

(a) Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held. The fully paid shares have no par value.

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Movements in Ordinary Share Capital	Date	Number ofshares	$
Balance at 1 July 2011		342,713,263	33,592,819
Entitlement Issue Shares at $0.02 each (note i)	September to
	November 2011	255,231,987	5,104,640
Private Placement at $0.02 each (note ii)	December 2011	24,904,365	498,087
Private Placement at $0.02 each (note iii)	January 2012	3,000,000	60,000
Private Placement at $0.02 each (note iv)	March 2012	57,345,192	1,146,908
Exercise of options at $0.08 each (note v)	June 2012	5	-
Less capital raising costs capitalised		-	(141,482)
Contributions to equity net of transaction costs
during the period		340,481,549	6,668,149
Less: proceeds received in prior period			(3,212,115)
Add: proceeds received in advance in current
period (note 29)			1,196,090
Contributions to equity net of transaction costs
during the period		-	4,652,124
Balance as at 30 June 2012		683,194,812	38,244,943

(i) Entitlement Issue Shares at A$0.02 per share

On 6 July 2011, the Company announced a one for one non-renounceable rights issue of fully paid shares in the Company at an issue price of $0.02 per share ("Entitlement Issue").

The Company issued 255,231,987 ordinary shares raising $5,104,640 via this Entitlement Issue.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

19. Contributed equity (cont'd)

(a) Ordinary shares (cont'd)

• (ii) Private Placement at A$0.02 per share In December 2011, the Company issued 24,904,365 shares via a private placement at an issue price of $0.02 per share raising $498,087.
• (iii) Private Placement at A$0.02 per share In January 2012 the Company issued 3,000,000 shares via a private placement at an issue price of $0.02 per share raising $60,000
• (iv) Private Placement at A$0.02 per share In March 2012 the Company issued 57,345,192 shares via a private placement at an issue price of $0.02 per share raising $1,146,908.
• (v) Exercise of options at $0.08 Five options were exercised at $0.08.
• (vi) Issue of Performance Rights

On 30 November 2011, the Company issued 5,000,000 Class A, 5,000,000 Class B, 5,000,000 Class C and 5,000,000 Class D performance rights to senior management of the Company. 1,250,000 class A, 1,250,000 class B, 1,250,00 class C and 1,250,000 class D Performance Rights expired when a member of senior management resigned. The performance rights were issued for nil cash consideration and each performance right converts into one fully paid ordinary share upon the following vesting conditions being achieved:

CLASS	Condition
Class A Performance Rights	Commencement of manufacturing of
	superchargers at a facility being established in
	Malaysia via a joint venture with AutoV
	Corporation, as was announced by the Company
	on 5 July 2011.
Class B Performance Rights	First quarter of positive earnings before interest,
	taxation, depreciation and amortisation.
Class C Performance Rights	First year of positive earnings before interest,
	taxation, depreciation and amortisation.
Class D Performance Rights	Second consecutive year of positive earnings
	before interest, taxation, depreciation and
	amortisation.

(b) Share options

On 9 September 2011, the Company issued 20,000,000 options with an expiry date of 30 June 2012 and an exercise price of $0.08 to consultants in consideration for business development services provided to the Company.

As at 30 June 2012, nil (2011: 28,751,108) options of the Company exercisable at $0.08 per share on or before 30 June 2012 were in issue.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D)

FOR THE YEAR ENDED 30 JUNE 2012

20. Reserves

(a) Convertible note equity

The equity component of convertible note represents the value of the unexercised equity component of a convertible note issued by the Company. This reserve was transferred to retained earnings when the convertible note was settled.

(b) Asset revaluation reserve

The asset revaluation reserve is used to record increments and decrements in the fair value of land and buildings to the extent that they offset one another. The reserve can only be used to pay dividends in limited circumstances. Upon sale of 73 Resource Way, Malaga, this reserve was transferred to retained earnings.

(c) Share option reserve

Share option reserve represents the fair value of the actual or estimated number of unexercised share options granted to management and consultants of the Company recognised in accordance with the accounting policy adopted for share-based payments and the equity component of options attached to the October 2010 non-renounceable entitlement issue and performance rights issued during the year with an estimated value of $95,980 (see notes 19(a), and 24 (c) and 25). As the options expired, this reserve was transferred to retained earnings.

		2012$	2011$
21.	Cash flow statement reconciliation
(a)	Reconciliation of cash flows from operating activities tooperating loss after income tax
	Operating loss after income tax	(5,191,710)	(4,238,296)
	Add non-cash items:
	Share based payments	95,980	9,000
	Net loss (gain) on the sale of assets	36,250	1,154
	Depreciation and amortisation	292,585	273,260
	Goodwill written off	479,136	-
	Impairment of inventory	255,463	-
	Share of loss of joint venture	103,889	-
	Exchange difference	-	26,348
	Changes in assets and liabilities
	Decrease / (increase) in trade and other receivables	279,503	(466,368)
	Decrease / (Increase) in inventories	231,484	(623,278)
	Increase due from a joint venture	(903,478)	-
	Increase / (decrease) in trade and other payables	148,652	(306,450)
	Increase in provision for warranty	43,352	17,484
	(Decrease) in provision for employee entitlements	(10,903)	(45,220)
	Net cash flows used in operating activities	(4,139,867)	(4,105,810)

(b) Non-cash financing and investing activities

During the year ended 30 June 2012:

• (i) the Company sold $903,478 of inventory and intellectual property to it's joint venture on deferred terms (see notes 12 and 23).
• (ii) the Company acquired $68,924 of equipment under finance leases. This acquisition will be reflected in the statement of cash flow over the terms of the finance leases via lease repayments.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D)

FOR THE YEAR ENDED 30 JUNE 2012

21. Cash flow statement reconciliation (cont'd)

		2012$	2011$
(c)	Reconciliation of cash and cash equivalents to cash flowstatement of cash flowFor the purpose of the statement of cash flow, cash and cashequivalents comprise the following at 30 June:
	Cash at banks and on hand	939,526	596,077
		939,526	596,077

22. Parent entity information

(a) Information relating to Sprintex Limited

	2012$	2011$
Current assets	4,022,750	3,512,203
Total assets	6,166,102	6,663,329
Current liabilities	775,687	837,433
Total liabilities	833,774	887,395
Contributed equity	38,244,943	33,592,819
Convertible note equity	-	41,254
Asset revaluation reserve	-	814,067
Share option reserve	95,980	573,966
Accumulated losses	(33,008,595)	(29,246,172)
Total shareholders' equity	5,332,328	5,775,934
Loss for the parent entity	(5,191,710)	(4,238,296)
Total comprehensive income of the parent entity	(5,191,710)	(4,176,383)

(b) Guarantees

Other than as disclosed in note 9, no guarantees have been entered into by the Company in relation to the debts of its subsidiaries.

(c) Commitments

Commitments of the Company as at reporting date are disclosed in note 26 to the financial statements.

(d) Tax consolidation

The Company and its 100% owned Australian resident subsidiaries formed a tax consolidated group with effect from 1 July 2004. The Company is the head entity of the tax consolidated group. The head entity and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. The Group has applied the group allocation approach in determining the appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated group. The current and deferred tax amounts are measured in a systematic manner that is consistent with the broad principles in AASB 112 Incomes Taxes. There is no tax funding agreement in place.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D)

FOR THE YEAR ENDED 30 JUNE 2012

23. Related party disclosures

The financial statements include the financial statements of the Company and the subsidiaries listed in the following table:

	Country of	% Equity Interest		Investment
Name of Entity	Incorporation	2012	2011	2012	2011
				$	$
Sprintex Australasia Pty Limited	Australia	100	100	479,136	479,136
AAC Property Investments Pty Limited	Australia	100	100	-	-
Provision of impairment				(479,136)
				-	479,136

Sprintex Australasia Pty Ltd holds patents and AAC Property Investments Pty Limited is the lessee of the building from which the company operates.

The following table provides the total amount of transactions that were entered into with related parties for the relevant financial year. For information regarding balances at 30 June 2012 and 2011, refer to Notes 16, 18, 19(a), 24 and 25:

Related Party		Sales toRelatedparty
Joint venture in which the parent is a venturerProreka Sprintex Sdn Bhd	2012	903,478

The ultimate parent. Sprintex Limited is the ultimate parent, based and listed in Australia.

There were no transactions between the Group and Sprintex Limited during the financial year (2011: $Nil).

Joint venture in which the entity is a venturer Proreka Sprintex Sdn Bhd The Group has a 50% interest in the assets, liabilities and net income of Proreka Sprintex Sdn. Bhd.

Terms and conditions of transactions with related parties Inventory and intellectual property was sold to the joint arrangement at the lower of cost and net realisable value.

Loan to joint venture in which the Group is a venturer The loan to the joint arrangement is interest free and unsecured.

Transactions with key management personnel

Director advances

The Directors advanced $1,196,090 to the Company in advance of an entitlement issue (see notes 19(a) and 29). These advances have been classified as equity and bear interest at 9% per annum until the opening of the entitlement issue.

Compensation of key management personnel of the Group

The compensation of key management personnel and other details are set out in note 24 to the financial statements.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

24. Key management personnel disclosures

(a) Key management personnel compensation

The key management personnel compensation is as follows:

	2012	2011
	$	$
Short-term employee benefits	817,906	772,213
Post employment benefits	12,106	13,503
Share-based payments	95,982	9,000
Total	925,994	794,716

(b) Option holdings of key management personnel

30 June 2012

Directors	Exerciseprice	Expiry Date	Balance at1 July 2011	Other changes(Note 1)	Balance at30 June 2012	Vested as of30 June 2012andexercisable
Mr R Siemens	A$0.08	30 Jun 2012	7,688,788	(7,688,788)	-	-
Mr S Apedaile	A$0.08	30 Jun 2012	6,438,122	(6,438,122)	-	-
Mr M Wilson	A$0.08	30 Jun 2012	4,962,716	(4,962,716)	-	-
Mr R O'Brien	A$0.08	30 Jun 2012	600,000	(600,000)	-	-
			19,689,626	(19,689,626)	-	-

30 June 2011

Directors	Exerciseprice	Expiry Date	Balance at1 July 2010	Other changes(Note 1)	Balance at30 June 2011	Vested as of30 June 2011andexercisable
Mr R Siemens	A$0.30	31 Dec 2010	1,500,000	(1,500,000)	-	-
	A$0.10	30 Jun 2011	7,143,051	(7,143,051)	-	-
	A$0.08	30 Jun 2012	-	7,688,788	7,688,788	7,688,788
Mr S Apedaile	A$0.30	31 Dec 2010	1,500,000	(1,500,000)	-	-
	A$0.10	30 Jun 2011	4,598,369	(4,598,369)	-	-
	A$0.08	30 Jun 2012	-	6,438,122	6,438,122	6,438,122
Mr M Wilson	A$0.08	30 Jun 2012	-	4,962,716	4,962,716	4,962,716
Mr R O'Brien	A$0.08	30 Jun 2012	-	600,000	600,000	600,000
Mr J Williams	A$0.10	30 Jun 2011	85,960	(85,960)	-	-
Mr J Upton	A$0.10	30 Jun 2011	120,000	(120,000)	-	-
			14,947,380	(4,742,246)	19,689,626	19,689,626

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

24. Key management personnel disclosures (cont'd)

(c) Shareholdings of key management personnel

Ordinary shares

The following table shows the movement during the year in the number of ordinary shares in Sprintex Limited held directly, indirectly or beneficially, by each key management personnel, including their related parties:

Year ended 30 June 2012	Held at1 July 2011	Received asremuneration	Otherchanges(Note 1)	Held at30 June 2012
Directors
Mr M Wilson	66,758,863	-	66,758,863	133,517,726
Mr R Siemens	66,470,467	-	66,470,267	132,940,734
Mr S Apedaile	55,001,469	-	29,421,712	84,423,181
Mr R O'Brien	3,222,609	-	3,222,609	6,445,218
Other key management personnel
Mr J Upton	900,000	-	-	900,000
Mr J Williams (2)	429,800	-	(429,800)	-
	192,783,208	-	165,443,651	358,226,859
	Held at	Received as	Other	Held at
Year ended 30 June 2011	1 July 2010	remuneration	changes	30 June 2011
			(Note 1)
Directors
Mr R Siemens	35,715,255	-	30,755,212	66,470,467
Mr S Apedaile	24,107,486	-	30,893,983	55,001,469
Mr M Wilson	41,309,500	-	25,449,363	66,758,863
Mr R O'Brien	822,609	-	2,400,000	3,222,609
Other key management personnel
Mr J UptonMr J Williams	600,000429,800	300,000-	--	900,000429,800

Notes:

(1) Shares were either acquired on market or via the entitlement issue detailed in note 19(a)(iii).

(2) Resigned during the year.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

24. Key management personnel disclosures (cont'd)

(c) Performance rights of key management personnel

The following table shows the movement during the year in the number of performance rights in the Sprintex Limited held directly, indirectly or beneficially, by each key management personnel, including their related parties:

Year ended 30 June 2012		Held at1 July 2011	Received asremuneration	Otherchanges	Held at30 June 2012
Directors
Mr S Apedaile	Class A	-	1,250,000	-	1,250,000
	Class B	-	1,250,000	-	1,250,000
	Class C	-	1,250,000	-	1,250,000
	Class D	-	1,250,000	-	1,250,000
Other key managementpersonnel
Mr M van Uffelen	Class A	-	1,250,000	-	1,250,000
	Class B	-	1,250,000	-	1,250,000
	Class C	-	1,250,000	-	1,250,000
	Class D	-	1,250,000	-	1,250,000
Mr J Upton	Class A	-	1,250,000	-	1,250,000
	Class B	-	1,250,000	-	1,250,000
	Class C	-	1,250,000	-	1,250,000
	Class D	-	1,250,000	-	1,250,000
Mr J Williams (1)	Class A	-	1,250,000	(1,250,000)	-
	Class B	-	1,250,000	(1,250,000)	-
	Class C	-	1,250,000	(1,250,000)	-
	Class D	-	1,250,000	(1,250,000)	-
		-	20,000,000	(5,000,000)	15,000,000

(1) Resigned during the year.

The performance rights were issued for nil cash consideration and each performance right converts into one fully paid ordinary share upon the following vesting conditions being achieved:

CLASS	Condition
Class A Performance Rights	Commencement of manufacturing of
	superchargers at a facility being established in
	Malaysia via a joint venture with AutoV
	Corporation, as was announced by the Company
	on 5 July 2011.
Class B Performance Rights	First quarter of positive earnings before interest,
	taxation, depreciation and amortisation.
Class C Performance Rights	First year of positive earnings before interest,
	taxation, depreciation and amortisation.
Class D Performance Rights	Second consecutive year of positive earnings
	before interest, taxation, depreciation and
	amortisation.

All equity transactions with key management personnel other than arising from the granting of employee shares have been entered into under terms and conditions no more favourable than those the Company would have adopted if dealing at arm's length.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

25. Share based payment transactions

To incentivise KPM, performance rights were issued during the year. See note 24 (c) for details.

The performance rights were valued based on the underlying share prices at the date of issue of $0.021 discounted using 50% per annum to allow for the risk of the performance hurdles not being achieved.

26. Commitments

(a) Operating lease commitments

The Company is the lessee in respect of certain property and items of plant and machinery and office equipment held under operating leases. The lease for the property has a term of 10 years from 1 July 2006 and lease payments are increased every year with indexation to reflect market rentals.

At the reporting date, the Group and the Company had outstanding minimum commitments under non-cancellable operating leases, which fall due as follows:

	2012	2011
	$	$
Within one year	199,058	199,058
After one year but not more than five years	597,174	796,234
After more than five years	-	-
Total minimum lease payments	796,232	995,292

(b) Finance lease and hire purchase commitments

The Company leases certain plant and equipment under finance leases expiring from 1 to 5 years. At the end of the lease terms the Company owns the equipment outright or has the option to purchase the equipment for the residual amount owing. The Company's obligations under finance leases are secured by the lessors' title to the leased assets.

Within one year	63,732	58,878
After one year but not more than five years	63,109	55,738
Total minimum lease payments	126,841	114,616
Less: amounts representing finance charges	(12,375)	(14,109)
Present value of minimum lease payments	114,466	100,507
Included in the financial statements as:
Current interest-bearing liabilities (note 16)	55,478	50,545
Non-current interest-bearing liabilities (note 16)	58,988	49,962
	114,466	100,507

(c) Capital commitments

As at 30 June 2012, the Company had outstanding capital commitments in respect of acquisition of property plant and equipment contracted for but not provided for in the financial statements in the amount of US$ nil (2011: US$50,000).

(d) Guarantees issued

As at 30 June 2012, the Company had an outstanding guarantee issued in favour of the landlord of leased premises in the amount of $82,000 (2011: $82,000). The guarantee is backed by a restricted bank deposit for the same amount (see notes 9 and 26(a)) and expires on 30 June 2016.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

27. Capital risk management

When managing capital, management's objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity.

Management are constantly adjusting the capital structure to take advantage of favourable costs of capital or high returns on assets. As the market is constantly changing, management may change the amount of dividends to be paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

During 2012 and 2011, no dividends have been paid. The Company does not yet have a dividend policy and payment of future dividends will be dependent upon the future profitability and financial position of the Company.

The capital structure of the Company consists of total debts, which includes the interest-bearing borrowings, and finance lease liabilities as detailed in note 16, cash and cash equivalents and equity attributable to equity holders of the Company, comprising contributed equity, reserves and accumulated losses as disclosed in notes 19 and 20 respectively.

Management monitor capital through the gearing ratio (net debt/total capital). For this purpose the Company defines net debts as total debts as defined above, less cash and cash equivalents. The gearing ratios at 30 June 2012 and 2011 were as follows:

	2012$	2011$
Total debts	203,761	438,483
Less: cash and cash equivalents	(939,526)	(596,077)
Net debt	(735,765)	(157,594)
Total equity	5,332,328	5,775,934
Total capital	4,596,563	5,775,934
Gearing ratio - Net debt / total capital	(16%)	(3%)

28. Financial risk management

The Group's and the Company's principal financial instruments comprise receivables, payables, interest bearing borrowings and overdrafts, finance lease liabilities, cash and short-term deposits.

Exposure to credit risk, liquidity risk, interest rate risk and currency risk arises in the normal course of the Group's and the Company's business.

The Group manages its exposure to key financial risks, including interest rate and currency risk in accordance with the Group's financial risk management policy. The objective of the policy is to support the delivery of the Group's financial targets whilst protecting future financial security. Debt borrowings are driven by balancing cash, short term borrowings and longer term capital financing of the business.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

28. Financial risk management (cont'd)

(a) Credit risk

The Group's credit risk is primarily attributable to its trade and other receivables. The Group's exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of each financial asset in the statement of financial position after deducting any impairment allowance.

Management has a credit policy in place and the exposures to these credit risks are monitored on an ongoing basis. In respect of trade and other receivables, individual credit evaluations are performed on all customers requiring credit over a certain amount. These evaluations focus on the customer's past history of making payments when due and current ability to pay, and take into account information specific to the customers as well as pertaining to the economic environment in which the customers operate. Trade receivables are due within 0 to 30 days from the date of billing. Debtors with balances that are more than 3 months past due are requested to settle all outstanding balances before any further credit is granted. Normally, the Group does not obtain collateral from customers.

At 30 June 2012, the Group's level of concentration of credit risk has deteriorated as 48% of total trade receivables was due from the Group's largest customer, while in the year ended 30 June 2012, 79% of the total trade receivables was due from the Group's largest customer.

Further quantitative disclosures in respect of the Group's exposure to credit risk arising from trade and other receivables are set out in note 10.

(b) Liquidity risk

The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans, finance leases and committed available credit lines. The Group manages its liquidity risk by monitoring the total cash inflows and outflows expected on a monthly basis and monitoring compliance with lending covenants on an ongoing basis.

The following table details the remaining contractual maturities at the reporting date of the Group's financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates, or if floating, based on rates current at the reporting date) and the earliest date the Group can be required to pay.

Year ended 30 June 2012	Carryingamount$	Totalcontractualundiscountedcash flow$	Within 1year or ondemand$	More than1 year butless than2 years$	More than2 years butLess than5 years$
Trade and other payables	486,222	486,222	486,222	-	-
Insurance premium funding	85,372	90,494	90,494	-	-
Finance lease liabilities	113,565	126,841	63,732	40,421	22,688
Loans from related entities	908,302	908,302	908,302	-	-
	1,593,461	1,611,859	1,548,750	40,421	22,688

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

28. Financial risk management (cont'd)

		Total		More than	More than
		contractual	Within 1	1 year but	2 years but
Year ended 30 June 2011	Carryingamount	undiscountedcash flow	year or ondemand	less than2 years	Less than5 years
	$	$	$	$	$
Trade and other payables	333,081	333,081	333,081	-	-
Insurance premium funding	68,627	72,745	72,745	-	-
Finance lease liabilities	100,507	114,616	58,878	38,778	16,959
Loans from related entities	269,349	275,409	275,409	-	-
	771,564	795,851	740,113	38,778	16,959

(c) Interest rate risk

The Group's interest rate risk arises primarily from interest bearing financial assets and financial liabilities. Financial instruments issued at variable rates and at fixed rates expose the Group to cash flow interest rate risk and fair value interest risk respectively. The Group's policy is to manage the borrowing structure to match the nature of funding needs and acknowledges that fair value exposure from the Group's fixed rate financial liability is a by product of the Group's attempt to manage its cash flow volatility arising from interest rate changes. At reporting date, the interest rate profile of the carrying value of the Group's interest bearing financial assets and liabilities are set out in the following tables:

	Floating	Fixed interest
Year ended 30 June 2012	interest rate	rate	Total
	$	$	$
Financial assets
Cash and cash equivalents	939,526	-	939,526
Pledged bank deposits	-	112,000	112,000
	939,526	112,000	1,051,526
Financial liabilities
Insurance premium funding	-	85,372	85,372
Finance lease liabilities	-	113,565	113,565
Loans from related parties	-	3,108	3,108
	-	202,045	202,045
Net exposure	939,526	(90,045)	849,481
	Floating	Fixed interest
Year ended 30 June 2011
	interest rate	rate	Total
	$	$	$
Financial assets
Cash and cash equivalentsPledged bank deposits	596,077-	-82,000	596,07782,000
	596,077	82,000	678,077
Financial liabilities
Insurance premium fundingFinance lease liabilities	--	68,627100,507	68,627100,507
Loans from related parties		259,877	259,877
	-	429,011	429,011
Net exposure	596,077	(347,011)	249,066

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

28. Financial risk management (cont'd)

(c) Interest rate risk (cont'd)

The interest rates and terms of repayment of the Group's borrowings are disclosed in notes 16 and 18 to the financial statements.

Cash flow sensitivity analysis for floating rate instruments

An increase of 100 basis points in interest rates at the reporting date would have increased net loss and accumulated losses by $9,395 (2011: $5,961). A decrease of 100 basis points in interest rates will have the same amount but opposite financial effect on net loss and accumulated losses.

The sensitivity analysis above has been determined assuming that the change in interest rates had occurred at the reporting date and had been applied to the exposure to interest rate risk for financial instruments in existence at that date. The 100 basis point increase or decrease represents management's assessment of a reasonably possible change in interest rates over the period until the next annual reporting date based on historical market trend. The analysis is performed on the same basis for 2012. There would be no impact on equity.

(d) Currency risk

The Group is exposed to currency risk primarily through sales and purchases that are denominated in a currency other than the functional currency of the operations to which they relate. The currencies giving rise to this risk are primarily Euros, United States dollars, Swedish Kroner and Malaysian Ringit. Currently, the Group does not have a policy to manage the currency risk arising from sales and purchases.

All the Group's borrowings are denominated in the functional currency of the entity taking out the loan. Given this, management does not expect that there will be any currency risk associated with the Group's borrowings.

The following table details the Group's exposure at the reporting date to currency risk arising from recognised assets or liabilities denominated in a currency other than the functional currency of the entity to which they relate.

	2012
	Euros	US dollars	SwedishKroner	MalaysianRingit
Trade and other receivables	-	34,996	-	-
Cash and cash equivalents	-	37,417	-	-
Trade and other payables	-	(45,953)	-	-
Overall net exposure	-	26,460	-	-
		2011
	Euros	US dollars	SwedishKroner	MalaysianRingit
Trade and other receivables	129	104,227	221,041	-
Cash and cash equivalents	-	-	-	-
Trade and other payables	-	(63,046)	-	(15,944)
Overall net exposure	129	41,182	221,041	(15,944)

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

28. Financial risk management (cont'd)

(d) Currency risk (cont'd)

The following table indicates the approximate change in the Group's loss after taxation and accumulated losses in response to reasonably possible changes in the foreign exchange rates to which the Group has significant exposure at the statement of financial position date. A positive number below indicates a decrease in net loss for the year and accumulated losses where the AUD weakens against the relevant currency. For a strengthening of the AUD against the relevant currency, there would be an equal and opposite impact on the net loss and accumulated losses, and the balances below would be negative.

	2012		2011
	Increase inforeignexchangerates	Effect onloss for theyear andaccumulatedlosses$	Increase inforeignexchangerates	Effect onloss for theyear andaccumulatedlosses$
United States dollars	10%	2,664	10%	(4,118)
Swedish Kroner	-	-	15%	(33,156)
Malaysian Ringit	-	-	10%	1,594

The sensitivity analysis has been determined assuming that the change in foreign exchange rates had occurred at the reporting date and had been applied to each of the group entities; exposure to currency risk for financial instruments in existence at that date, and that all other variables, in particular interest rates, remain constant.

The stated changes represent management's assessment of reasonably possible changes in foreign exchange rates over the period until the next annual reporting date. Results of the analysis as presented in the above table represent an aggregation of the effects on each of the group entities' net loss for the year and accumulated losses measured in the respective functional currencies, translated into AUD at the exchange rate ruling at the statement of financial position date for presentation purposes. The analysis is performed on the same basis for 2010. There would be no impact on equity.

(e) Fair value estimation

All financial instruments are carried at amounts not materially different from their fair values as at 30 June 2012 and 2011.

The carrying value of trade and other receivables and payables are assumed to approximate their fair values due to their short term nature. The fair value of financial liabilities is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments, as detailed in notes 16. The directors consider that the change in interest rates will not cause a significant impact on the fair values of the financial liabilities.

No financial instruments are carried at fair value.

NOTES TO THE FINANCIAL STATEMENTS (CONT'D) FOR THE YEAR ENDED 30 JUNE 2012

29. Events subsequent to reporting period

• (a) Subsequent to the reporting period, the Company raised equity capital by way of a one for six non-renounceable entitlement issue at $0.02 per share with three free attaching options with an exercise price of $0.02 per share any time on or before 30 June 2013. 83,874,225 ordinary shares were issued for total gross proceeds of $1,677,484. The directors have until 13 November 2012 to place the remaining 29,992,079 shares.
• (b) Subsequent to the reporting period, the Company's Joint Venture, Proreka Sprintex Sdn. Bhd. (JV) obtained bank financing of 80% of the equipment cost under a facility totalling RM 5 million (approximately $1.6 million) (Facility). The financing was conditional on each of two of the Malaysia resident directors of the JV, AutoV Corporation Bhd (the Company's joint venture partner) and AutoV Corporation BHD's parent, Globaltec BHD, providing 'an all monies guarantee' to secure the Facility. The Company agreed to provide indemnities totalling half of the limit under the Facility, being a maximum of RM 2.5 million (approximately $0.8 million), to support the guarantees issued by the aforesaid parties.

DIRECTORS' DECLARATION

In accordance with a resolution of the directors of Sprintex Limited, I state that:

• 1. In the opinion of the directors:
• a. The financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including*:*
  • (i) giving a true and fair view of the consolidated entity's financial position as at 30 June 2012 and of its performance for the year ended on that date; and
  • (ii) complying with the Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001;
• b. the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 2(a); and
• c. subject to note 2(b) to the financial statements, there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and when they become due and payable.
• d. this declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2012.

Dated at Perth this 28th day of September 2012.

_____________________

Steven Apedaile Managing Director

ASX ADDITIONAL INFORMATION

The following additional information is provided in accordance with the listing rules and is current as at 26 September 2012.

(a) Distribution of equity securities

(i) Ordinary share capital

767,073,547 fully paid ordinary shares are held by 501 individual shareholders. All issued ordinary shares carry one vote per share and carry the rights to dividends.

The number of shareholders, by size of holding, in each class is:

	Fully PaidOrdinaryShares	Optionsexp30/06/13@ $0.02
1 – 1,000	25	6
1,001 - 5,000	14	2
5,001 - 10,000	44	3
10,001 - 100,000	205	35
100,001 and over	213	37
	501	83
Holding less than a marketable parcel	150	-

(b) Substantial shareholders

		Fully paid
Ordinary shareholders	Number	Percentage
Mr Michael John Wilson and Mrs Megan Joy Wilson	155,770,681	20.31%
Mr Richard John Siemens and his controlled entities	155,097,523	19.80%
Mr Steven James Apedaile and his controlled entities	102,627,045	13.38%
	413,495,249	53.49%

ASX ADDITIONAL INFORMATION (CONT'D)

(c) Twenty largest holders of quoted equity securities

		Fully paid
Ordinary shareholders	Number	Percentage
Mr Michael John Wilson & Mrs Megan Joy Wilson	155,770,681	20.31%
China Automotive Holdings Limited	155,097,523	20.22%
Mr Steven James Apedaile & Mrs Michelle Lynda Apedaile	105,627,045	13.77%
Euro Mark Limited	37,340,256	4.87%
Mr Kok Keong Kong	33,305,529	4.34%
Mr Tian Chuan Goh	28,547,596	3.72%
Australian Executor Trustees Limited	19,833,655	2.59%
Daily Power Pty Limited	17,115,000	2.23%
Yarrumup Pty Ltd	16,333,334	2.12%
JP Morgan Nominees Australia Limited	12,633,420	1.65%
HSBC Custody Nominees (Australia) Limited	12,571,333	1.64%
ABN Amro Clearing Sydney Nominees Pty Ltd
	11,925,590	1.56%
I-Biz Limited	10,616,667	1.38%
Falmac Pty Ltd	8,817,728	1.15%
Mr Richard John O'Brien	7,519,421	0.99%
Dr Mansour Almasi	4,750,000	0.62%
Mr Lester Raymond Hewitt	3,760,000	0.49%
Mr John Bryan Clemsha	3,750,000	0.49%
Mr Siavash Khosrowshahi &Mrs Zahra-Nahid Khosrowshahi
	3,521,927	0.46%
Mr Andrew Frederick Lachlan Horsley & Mrs Noela Horsley
	3,500,000	0.46%
	652,336,705	85.06%

ASX ADDITIONAL INFORMATION (CONT'D)

(c) Twenty largest holders of quoted equity securities (cont'd)

		2 cents, 30 June 2013
		Options
Option holders	Number	Percentage
Mr Michael John Wilson & Mrs Megan Joy Wilson	66,758,865	26.53%
China Automotive Holdings Limited	66,470,367	26.42%
Mr Steven James Apedaile & Mrs Michelle Lynda Apedaile	43,211,592	17.17%
Mr Kok Keong Kong	14,273,799	5.67%
Mr Matthew Burford	12,750,000	5.07%
Daily Power Pty Limited	7,335,000	2.92%
Yarrumup Pty Ltd	7,000,002	2.78%
HSBC Custody Nominees (Australia) Limited	4,911,999	1.95%
JP Morgan Nominees Australia Limited	4,771,464	1.90%
I-Biz Limited	4,550,001	1.81%
Mr Richard John O'Brien	3,222,609	1.28%
Mr Andrew Frederick Lachlan Horsley & Mrs Noela Horsley
	1,500,000	0.60%
Miss Anne Walker	1,476,000	0.59%
Tarawa Superannuation Pty Ltd	1,382,001	0.55%
Ms Celia Mi Choi Kwong	1,284,000	0.51%
Netco Limited	1,224,000	0.49%
Mr Brent Fisher	1,125,000	0.45%
Plus Three Holdings Ltd	1,008,000	0.40%
William Geoffrey Kroon	855,501	0.34%
Crompton Corporation Pty Ltd	682,188	0.27%
	245,792,388	97.70%